Market Overview

Analyst Says Negative Allergan Headlines Are Priced In, Upgrades Stock

Share:
Analyst Says Negative Allergan Headlines Are Priced In, Upgrades Stock
Related AGN
The Daily Biotech Pulse: Pfizer And Allergan Earnings, CFO Departures At Acadia And Assertio
Earnings Scheduled For October 30, 2018
Seth Klarman Gains Stake in Akebia Therapeutics (GuruFocus)

Allergan plc Ordinary Shares (NYSE: AGN) have seen heavy selling pressure throughout parts of 2017, but some analysts are encouraging investors to take advantage of the weakness.

The Analyst

Morgan Stanley's David Risinger upgraded Allergan's stock rating from Equal-weight to Overweight with an unchanged $200 price target.

The Thesis

Allergen's stock has come under heavy selling pressure since July for four reasons, Risinger said:

  • Downward revisions to the company's out-year outlook.
  • Concerns with the pipeline.
  • Competitive threats to Botox.
  • Concerning headlines relating to licensing the Restasis patent to an Indian tribe.

At this point in time, Allergan's negative overhangs are now mostly priced in, the analyst said. (See Risinger's track record here.) 

For example, a potential competitor to Botox, Revance Therapeutics Inc (NASDAQ: RVNC), is unlikely to report Phase 3 data in the coming days that its RT002 is materially longer-lasting than Botox, the analyst said. Aside from Botox, expectations are that Allergan's depression therapy rapastinel will improve with the conclusion of three Phase 3 studies projected at the end of 2018, while Phase 2 data indicates the therapy could be a blockbuster, according to Morgan Stanley. 

Risinger's $200 price target is based on an 11.7x multiple on the analyst's 2018 EV/EBITDA of 11.7x, which implies a slight discount to its major pharmaceutical peers at 12.0x.

Price Action

Shares of Allergan hit a new 52-week low of $168.43 on Tuesday but were trading higher by more than 2 percent early Wednesday morning.

Related Links:

Imprimis Launches 99-Cent Generic Drug To Compete With Allergan's Restasis

The Companies That Manipulated The Tax System, According To The Paradise Papers

Photo courtesy of Allergan. 

Latest Ratings for AGN

DateFirmActionFromTo
Nov 2018Leerink SwannInitiates Coverage OnOutperform
Oct 2018Credit SuisseMaintainsOutperformOutperform
Oct 2018Raymond JamesMaintainsOutperformOutperform

View More Analyst Ratings for AGN
View the Latest Analyst Ratings

Posted-In: BOTOX David Risinger Morgan Stanley pharmaceuticalsAnalyst Color Health Care Analyst Ratings General Best of Benzinga

 

Related Articles (AGN + RVNC)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
DLTRBernsteinUpgrades0.0
CNPUBSUpgrades34.0
UGIUBSDowngrades63.0
ATOUBSDowngrades106.0
CSCONomuraDowngrades50.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

The Market In 5 Minutes: Chipotle CEO Search, Matt Lauer Fired, GDP Grows 3.3%

For Chipotle, The Search For A New CEO Begins