NEW YORK (TheStreet) -- Allergan (AGN) - Get Report  shares are gaining 0.5% to $287.20 on Thursday after the pharmaceutical giant said that it was approached by Pfizer (PFE) about a possible merger deal, the Financial Times reports.

The company is in preliminary "friendly" discussions with Pfizer.

If the two combine, this would be the biggest takeover deal of the year and create the largest healthcare group valued at around $330 billion, Reuters noted.

The possible merger would lift Pfizer's revenue and lower its corporate tax rate, since Allergan is located in Dublin, which has a lower tax rate than the U.S.

Overall, Bernstein analysts added that Allergan was a good fit for Pfizer.

TST Recommends

Allergan is a holding of Jim Cramer's Action Alerts PLUS portfolio.

On Thursday morning, Pfizer shares are rallying 1.31% to $35.45.

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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity 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 6.2%. Since the same quarter one year prior, revenues leaped by 115.8%. 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.
  • Net operating cash flow has significantly increased by 157.87% to $1,401.30 million when compared to the same quarter last year. In addition, ALLERGAN PLC has also vastly surpassed the industry average cash flow growth rate of -45.83%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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 599.2% when compared to the same quarter one year ago, falling from $48.70 million to -$243.10 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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