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TheStreet Open House

How Will Allergan (AGN) Stock Respond To Special Shareholders Meeting Request By Valeant (VRX), Pershing Square?

NEW YORK (TheStreet) -- Shares of Allergan Inc. (AGN) continue to trade lower today, down -1.02% to $162.71, as it was reported that Valeant Pharmaceuticals International (VRX)  and Pershing Square Capital Management will submit a request on Friday to the company for a special shareholders meeting, sources told CNBC TV.

Allergan's corporate bylaws require Valeant and Pershing Square to have more than 25% of shareholders' votes in favor of holding the meeting. They have support from more than 30%, sources added.

Allergan is fighting Valeant and Pershing Square's $49 billion offer to buy the company.

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Earlier, it was reported that a federal judge in California yesterday denied a request by the company to expedite its civil suit claiming that Valeant and Pershing Square engaged in insider trading ahead of their bid to buy Allergan, according to Reuters.

TheStreet Ratings team rates ALLERGAN INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLERGAN INC (AGN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 16.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.39, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 71.74% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AGN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALLERGAN INC has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLERGAN INC increased its bottom line by earning $4.20 versus $3.57 in the prior year. This year, the market expects an improvement in earnings ($5.79 versus $4.20).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 15.9% when compared to the same quarter one year prior, going from $359.90 million to $417.20 million.
  • You can view the full analysis from the report here: AGN Ratings Report
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