NEW YORK (TheStreet) -- Shares of Botox maker Allergan (AGN) have soared by as much as 60% in 2014. More than half of those gains have come since Bill Ackman's Pershing Square Capital Management and Valeant Pharmaceuticals (VRX) announced their interest in buying Allergan.
Allergan investors have done well, but this would have been the case even without the added M&A boost from Pershing Square and Valeant. Prior to Valeant's bid was made public in April, Allergan shares were up already close to 22%.
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It's now time to take some money off the table.
Not only does the stock, at close to $170, trade at a considerable premium to its peers at present, it's become less likely that another company will step in and outbid Valeant. This may be as as good as it's going to get for Allergan shareholders.
Up almost 53% for the year to date as of Tuesday, Allergan stock is now trading at price-to-earnings ratio of 41, which is 20 points higher than the industry average, according to Yahoo! Finance. Meanwhile, Johnson & Johnson (JNJ) and Novartis (NVS) carry multiples of 20 and 24, respectively.
On a forward-looking basis, Allergan shares aren't any cheaper. Based on 2015 earnings estimates of $8.23, according Yahoo! Finance, the stock carries a multiple of 20, compared to 16 for Johnson & Johnson.
Allergan investors are paying for growth. With the company posting 16% year-over-year jump in revenue in the most recent quarter, Allergan has not disappointed. Still, the company pays a yield of only 0.10%, which 2.70% and 3.0% less than Johnson & Johnson and Novartis, respectively.