Here's Why You Should Buy Shares of Powerhouse Drug Maker Allergan

Drug maker Allergan (AGN) - Get Report reported first-quarter earnings Tuesday, and though the company missed analysts' sales expectations, rising revenue and optimistic plans have sent shares higher.

Investors like what they see, and this could be a good time to get in while the stock is still priced at a relative discount.

Allergan reported net income of $255.7 million, compared with a loss of $512 million a year earlier. Earnings rose 15% year over year to $3.04 a share on revenue from continuing operations of $3.8 billion, up from $2.6 billion a year earlier, though analysts were expecting $3.95 billion.

The company attributes the revenue miss to losing its mostly generics distribution relationship with Target.

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But Allergan is optimistic about the future and, indeed, has proactive plans for this year.

The past few years have been hectic for the company.

In March 2015, Allergan, which is most famous for its Botox treatments, was acquired by Actavis in a deal worth $71 billion. The combined pharmaceuticals company, which is the largest in the world, took the Allergan name.

And last month, a deal valued at $150 billion with Pfizer was called off due to concerns over the Obama administration's increasing clampdowns on so-called tax inversion structures.

Under these configurations, companies relocate from the United States to more favorable tax environments. Pfizer is located in New York, whereas Allergan is based in the lower-tax jurisdiction of Ireland.

However, there is still a big deal on the horizon with Teva Pharmaceutical Industries that could be a game-changer for the company.

Teva is awaiting clearance from the Federal Trade Commission to purchase Allergan's generic drugs division in a deal worth $40.5 billion. The purchase is expected to go through by the end of next month, and it would effectively free Allergan from its existing debt.

In return, Allergan plans to initiate a campaign of share buybacks to the tune of $10 billion within four to six months of the Teva deal's completion.

"When we look at the universe of things to buy, we don't see anything that is a better investment than our own equity," Allergan Chief Executive Brent Saunders said.

Clearly, the company isn't planning any other major deals for the near future.

Instead, Allergan will reinvest in its own portfolio of products and hone its strategy. These efforts will be assisted by some streamlining of the company's management team.

The company also said Tuesday that its head of branded drug sales, Bill Meury, will become chief commercial officer, and that Bob Stewart, head of supply chain, will be promoted to chief operating officer.

With a positive outlook for this year, as well as a deal nearing completion that will free the company from debt and allow further product development, investors are jumping into Allergan, and the stock is up more than 4% on Tuesday.

This is a good time for investors to scoop up shares in this pharmaceuticals powerhouse.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.