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JPMorgan On Allergan: Solid Core Product Performance

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JPMorgan On Allergan: Solid Core Product Performance

JPMorgan has maintained its Overweight rating on Allergan plc Ordinary Shares (NYSE: AGN), saying that the double-digit growth in the company's brands business is expected to continue throughout the year.

Allergan's first quarter adjusted earnings of $3.04 a 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.

Despite missing consensus on the topline, Allergan's key brands such as Botox, Linzess, Lumigan, Alphagan and dermal fillers delivered strong growth in the quarter.

"With this highly controversial quarter now in the rearview mirror, we see an attractive setup in AGN shares going forward based on a combination of attractive valuation (~12x 2017E EPS), ongoing healthy organic growth, and significant capital deployment optionality," analyst Chris Schott wrote in a note.

Related Link: Citi Maintains Its Constructive Stance On Allergan

The Parsippany, New Jersey-based specialty pharma company 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.

"At current levels, this repo authorization represents over 10 percent of the company's outstanding shares, and we estimate every $1 billion in share repo is ~$0.15–0.20 accretive to AGN's earnings on an annualized basis," Schott highlighted.

Looking ahead, Allergan still sees adjusted revenues of $17 billion for the current year. That included branded net revenue of $15 billion. 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.

Shares of Allergan closed Tuesday's regular trading session 5.14 higher at $224.69.

Latest Ratings for AGN

DateFirmActionFromTo
Apr 2020SunTrust Robinson HumphreyDowngradesBuyHold
Mar 2020CFRADowngradesBuyHold
Feb 2020SunTrust Robinson HumphreyMaintainsBuy

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