The acquisition provides $36 billion in net cash for Allergan to rapidly de-lever, continue aggressively acquiring faster growing and pipeline assets on the brand side, according to the analyst note.
Allergan is a global pharmaceutical company focused on developing, manufacturing and commercializing branded pharmaceuticals, generic and over-the-counter medicines, and biologic products.
Shares of Allergan are gaining 0.65% to $329.12 in mid-morning trading on Tuesday.
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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AGN's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 59.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, AGN's share price has jumped by 43.40%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- ALLERGAN PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALLERGAN PLC reported poor results of -$5.88 versus -$5.43 in the prior year. This year, the market expects an improvement in earnings ($17.82 versus -$5.88).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 630.6% when compared to the same quarter one year ago, falling from $96.50 million to -$512.00 million.
- You can view the full analysis from the report here: AGN Ratings Report