Allergan (AGN), Pfizer CEOs Discuss Roles if Merger Occurs, Stock Leaps
NEW YORK (TheStreet) -- Allergan (AGN) - Get Report and Pfizer (PFE) are becoming increasingly confident of a $150 billion merger as the CEOs have reportedly agreed on what titles they would assume in a combined company, according to Reuters.
Shares of Allergan closed Friday's trading session up 3.63% and Pfizer closed down 0.34% to $32.18.
If the largest-ever healthcare merger were to occur, the combined company would have Pfizer CEO Ian Read as CEO.
On the other hand, Allergan CEO Brent Saunders will have a senior role, positioning him to have a high chance of being Read's successor, if he steps down, Reuters added.
However, one challenge stands in the way. The U.S. Treasury Department on Thursday took initiatives hold the line on tax-avoiding inversion deals with new rules.
While this hurdle is concerning some investors, it seems as though the two companies are confident that the regulatory risk will not threaten the deal, Reuters said.
Yesterday, the two negotiated a break-up fee of between 2% to 3%.
Separately, TheStreet Ratings team rates ALLERGAN PLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate ALLERGAN PLC (AGN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AGN's very impressive revenue growth greatly exceeded the industry average of 3.7%. Since the same quarter one year prior, revenues leaped by 90.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- ALLERGAN PLC has improved earnings per share by 46.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALLERGAN PLC reported poor results of -$8.65 versus -$5.43 in the prior year. This year, the market expects an improvement in earnings ($15.33 versus -$8.65).
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that AGN's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
- Compared to other companies in the Pharmaceuticals industry and the overall market, ALLERGAN PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AGN