Favus Gives 10 Reasons To Sell Allergan

Analysts at Favus Research pointed out 10 reasons to sell Allergan plc Ordinary Shares AGN.

10 Reasons

Firstly, the analysts mentioned that sell-side analysts “tuned out” during the Pfizer Inc. PFE deal. Therefore, the forecasts were old and not in sync with current trends.

The analysts also noted that Allergan’s businesses were witnessing decelerating growth, while the Dry Eye franchise has not witnessed any growth at all and was facing competition.

With SG&A failing to decline as it would have with the Pfizer deal, the expense expectations also appear too low, while expectations associated with the near term launch of drug candidates could prove too bullish.

Risk-Reward & Share Price

According to the Favvus report, Allergan’s “product pipeline is mediocre,” and the company still has a debt burden of $7 billion following the Teva Pharmaceutical Industries Ltd (ADR) TEVA deal.

The analysts pointed out that risk/reward into the closing of the deal was unfavorable, given that the merged entity’s CEO would be “a deal maker and not a innovation company CEO.”

Stating that Botox was facing competition, the analysts estimated that Allergan’s shares were likely to trade below $140 per share.