Citi Maintains Its Constructive Stance On Allergan

Citi has maintained its Buy rating on Allergan plc Ordinary Shares (NYSE: AGN), saying the performance of the core brands "should not be overlooked."

Allergan's first-quarter adjusted earnings of $3.04 per share topped the Street's estimate of $3.01. The company's adjusted top line grew 48.1 percent to $3.9 billion, yet came in below consensus view of $3.95 billion.

Related Link: Allergan Q1 Adjusted Earnings Beat Predictions

"While AGN's 1Q16 revenues missed consensus expectations, we note the strong performance of key brands (Botox, Linzess, Lumigan, Alphagan, dermal fillers) vs. Street expectations," analyst Liav Abraham wrote in a note.

Share Buyback Program

The Botox maker also authorized a new $10 billion share buyback program, of which $4 billion–$5 billion is expected to be executed over the next four to six months.

"While the share buyback signals management's view regarding the stock's valuation, it also preserves meaningful optionality for execution on incremental business development opportunities," Abraham noted.

A Look Forward

Looking ahead, Allegan still sees adjusted revenues of $17 billion for the current year. That included branded net revenue of $15 billion. The Street analysts expect the company to deliver $16.88 billion revenue. The company indicated that its non-GAAP R&D is expected to be $1.5 billion.

"While the positive development of a share buyback may be moderated by the 1Q16 top-line miss, we maintain our view regarding the quality of AGN's core assets and the company's growth profile vs. the peer group," Abraham added.

Shares of Allergan closed Tuesday's regular trading session 5.14 higher at $224.69. The analyst has a price target of $285 on the stock.