This morning, analysts at Citigroup added Actavis (ACT:NYSE) to their
U.S. Focus List (which includes the firm's highest conviction ideas) on
the belief that the company’s attractive near to medium-term organic
growth profile is not reflected in current valuation levels. Citi forecasts
high single-digit top-line organic growth through 2018, on average,
driven by core franchises.
Citi anticipates investor focus in specialty pharma to increasingly shift
towards those companies (like Actavis) with the ability to execute on
long-term, profitable growth.
The firm also believes there is opportunity for a re-rating in ACT over
the next six to 12 months, driven by a successful integration of the
Allergan (AGN:NYSE) acquisition resulting in above-consensus
financial results and incremental pipeline wins.
In the near-term, Actavis' M&A activities will likely focus on pipeline
and/or product deals aimed at preserving and/or augmenting its
market-leading position in core franchises.
We wholeheartedly agree with Citi's analysis, and even after the
recent rally, see material upside to shares. Our target remains $350.
Jim Cramer, Portfolio Manager & Jack Mohr, Director of
Research - Action Alerts PLUS
DISCLOSURE: At the time of publication, Action Alerts PLUS
was long ACT.
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