Allergan (N:AGN_pa) Health Care - Pharmaceuticals | Reports February 22, Before Market Opens
Key Takeaways
- The Estimize consensus is calling for EPS of $3.47, a resounding 10 cents higher than Wall Street, and revenue expectations of $4.21 billion, roughly $85 million greater than the Street
- In late 2015, Allergance announced a merger with Pfizer valued at roughly $160 billion
- Allergan plans to expand its branded segment which has caused it to sells its generics business to Teva Pharma Industries Ltd (N:TEVA)
Drug and pharmaceutical manufacturer, Allergan is scheduled to report fourth quarter earnings February 22, before the market opens. The company is coming off a better than expected third quarter but the bigger news was the $160 billion merger with pharma giant, Pfizer Inc (N:PFE). Consequently, share prices rose 20.60% this past year with expectations at an all time high when the company reports on Monday. The Estimize consensus is calling for EPS of $3.47, a resounding 10 cents higher than Wall Street, and revenue expectations of $4.21 billion, roughly $85 million greater than the Street. Compared to Q4 2014 this represents a projected decline on the bottom line by 11% and increase in sales of 4%. Despite some wins for Allergan, the Estimize community has been bearish on earnings, revising EPS and revenue estimates down 8% and 7% in the past 3 months, respectively. Since the announced merger, Allergan has not provided guidance for the remainder of fiscal 2015 nor fiscal 2016. 
The proposed merger is a win-win for both companies, Allergan will now have the leverage to expand its branded segment while Pfizer finds a legal home in tax friendly Ireland. Allergan’s growth strategy has primarily focused on expanding its branded segment through acquisitions and developing the pipeline. In order to accomplish this, Allergan decided to sell its generics business to Teva. Once the deal closes in FQ1 2016, Teva will acquire Allergan’s legacy business Actavis (N:AGN) global generics. This opens up Allergan to focus solely on branded products, with more than 70 projects currently in mid to late stage development. Pfizer should help streamline this process with operational expertise and capabilities needed to support Allergan’s long term investment. In the meantime, the merger brings on several concerns including risks in the integration process and setbacks in the pipeline.
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