NEW YORK (TheStreet) -- Shares of Allergan, Inc. (AGN) are up 0.20% to $169.56 this morning after it was reported that the company may take on debt to buy back its own shares as part of its plan to fight off a $53 billion takeover bid by Valeant Pharmaceuticals International Inc. (VRX) and the activist investor William Ackman, Reuters reports.
The company is also considering making acquisitions of its own and more spending cuts to increase shareholder value, CEO David Pyott told Reuters, outlining steps to build support for Allergan to remain a standalone company.
But Valeant says it already has enough shareholders on its side to call a special meeting to replace Allergan board members with nominees who support its takeover proposal. To do so the company needs support of the holders of at least 25% of the shares, Reuters noted.
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, compelling growth in net income, good cash flow from operations and solid stock price performance. 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 5.6%. Since the same quarter one year prior, revenues rose by 12.8%. 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.
- The current debt-to-equity ratio, 0.33, 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 3.69, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 1958.4% when compared to the same quarter one year prior, rising from $12.50 million to $257.30 million.
- Net operating cash flow has increased to $165.80 million or 38.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.97%.
- ALLERGAN INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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 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 ($5.70 versus $4.20).
- You can view the full analysis from the report here: AGN Ratings Report