NEW YORK (TheStreet) -- Actavis (ACT) shares are up 4.7% to $259.60 on heavy volume in early market trading on Tuesday, after the company's price target was raised to $310 from $250 by analysts at Citigroup.
The new price target represents a potential 19.4% upside from the stock's current price.
The upgraded outlook comes after the company agreed to buy botox-maker Allergan (AGN) for $66 billion, making it one of the largest drug maker's by sales worldwide.
"While our pro-forma estimates are slightly below management's expectations of double-digit top line organic growth (we forecast mid- to high-single digit revenue growth) and a $25 pro-forma EPS target in 2017e (we estimate $24.35), this transaction transforms both the quality and magnitude of ACT's growth profile," the firm said.
TheStreet Ratings team rates ACTAVIS PLC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ACTAVIS PLC (ACT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: ACT Ratings Report