Allergan's Strength Lies In Its New Products And Robust Pipeline

Since the market’s response to Allergan plc Ordinary Shares AGN’s disappointing earnings and reduced guidance on November 2, shares are trading just above the company's 52-week low of $184.50.

Rating's Thesis

Argus maintains its Buy rating for the stock while drastically lowing the price target from $340 to $260, which still represents a 35 percent upside from the current stock price.

The reason for the revised thesis, according to the research note published Monday, was temporary headwinds in the form of weak sales from mature drugs Asacol and both Namenda IR and XR.

Further Justification

Regardless, the note stated that sales growth is strong in the newer products and a “strong” new product pipeline reinforces the firm's Buy rating.

“Although management (perhaps distracted by the Pfizer Inc. PFE's takeover attempt) appears to have underestimated how quickly sales of these mature drugs were declining,” stated the analyst, “we believe that Allergan has strong current growth drivers as well as a solid R&D pipeline.

At the time of writing, shares of Allergan were trading at $191.78 early Monday.