Credit Suisse Presents Bull And Bear Cases For Allergan

The analysts see the stock trading at $329 as a "base case" scenario, $391 under a "bull case" scenario and $200 under a "bear case" scenario.

The Bull Case

Under the bull case scenario, Allergan's Botox division will continue demonstrating "strong" growth and "anchor" Allergan's aesthetics business. At the same time, risks surround Restasis are "overstated" given the company's "dominant" position in ophthalmology.

In addition, Viberzi, Vraylar and Kybella are all recently launched products that have the potential to become a $1 billion franchise.

Over the longer-term scenario, Abicipar will command a "significant" portion of the very large market, and Rapastinel has the potential to record multi-billion dollars in annual revenue.

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The Bear Case

The bear case scenario assumes that heightened competition will pressure both Botox and Restasis. As such, the two franchises will "erode faster" than company projected.

Meanwhile, recently launched products hold just a "modest potential" of success, but Allergan is simply "too big" for the products to have much of an impact.

Over the longer term, there are "limited exciting new product innovations" so it is "difficult" to give the company credit for drugs that are years away from entering the market.

Credit Suisse's Case

The analysts at Credit Suisse concluded that while they are "optimistic" on Allergan's base businesses, there are challenges ahead. Specifically, the analysts are cautious on Restasis given Xidra's strong label; furthermore, the Namenda franchise will see flat sales moving forward.

The analysts also acknowledged that Viberzi and Vraylar are in large markets that Allergan "knows well," so the company will succeed. Kybella is taking some time to roll out but the analysts' checks with physician indicate "significant interest."

Over the longer term, Allergan faces several interesting opportunities, but it would "take more data before we can get too excited."

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