Another analyst has jumped on the Allergan (AGN) bandwagon.
Getty Images Citigroup’s Liav Abraham and team upgraded Allergan to Buy from Neutral, skipping Outperform in between. They explain why:
Following the recent removal of the Restasis and Lumigan overhangs, we are reassured regarding the organic longer-term growth profile of [Allergan]. The stock offers the most attractive growth amongst the peer group (10% and 17.5% 3-year sales and [earnings-per-share compound annual growth rate] vs. the peer group averages of 7% and 12%). Our 2014e-2016e sales and EPS estimates are 2-15% ahead of the Street.
Risk-reward skewed to the upside; we prefer to be buyers of the name – Despite the recent share price appreciation, [Allergan's] current 2015e earnings multiple of 17.5x remains only slightly above the peer group average of 16x, despite the company's robust sales and earnings profile. The risk-reward profile remains skewed to the upside: our bear case [target price] represents 17% downside to our base case, vs. 25% upside for our bull case.
Since Dec. 24, Allergan has been upgraded by Wells Fargo and Sun Trust Robinson Humphrey, while getting imitated at Buy at RBC Capital Markets.
Shares of Allergan have gained 2.5% to $114.78 today at 3:44 p.m., while Merck (MRK) has risen 2.4% to $53.33, Hospira (HSP) has ticked up 0.1% to $42.51 and Eli Lily (LLY) has advanced 0.7% to $53.04.
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