Allergan Again A Core Holding At UBS

Shares of Allergan plc Ordinary Shares (NYSE: AGN) are down 22 percent since March 28. UBS’ Marc Goodman maintained a Buy rating for the company, with a price target of $300.

Potential Core Holding

Analyst Marc Goodman mentioned that while Allergan has emerged as a larger company with more exposure to primary care, the growth of Botox, its primary product, is likely to get challenging without new indications.

The analyst believes that Allergan’s stock has a chance to be a core holding as management continues to defend Botox and invest in building a solid pipeline.

Investor concerns related to the deal with Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA) getting blocked and leaving Allergan with a lower multiple are likely to get resolved soon. Management has guided to a June closure for the deal.

Strong Fundamentals
The sale of the generics business will make Allergan a pure pharma company. The fundamentals of this business are robust, with sales likely to reach $23 billion in 2020 from $16.8 billion in 2016. Allergan’s strong pipeline and sustainable base business are expected to drive robust growth in the coming years.

Goodman expects Allergan to use $35B net proceeds from the Teva deal for both debt repayment and share repurchases. The company may also use some of the proceeds make additional acquisitions as part of its attempts to expand pipeline.