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Street Positive On Allergan Post Earnings

|Includes: Allergan plc (AGN)

Allergan AGN $122.71 is a pharmaceutical company based in Irvine, California. The company specializes in developing and commercializing pharmaceuticals, biologics, medical devices and over-the-counter products. Its products focus on a range of popular healthcare issues including dry eye, glaucoma, inflammation, infection, allergies, acne, psoriasis as well as aesthetic products such as botox, reconstructive surgery and tissue expanders and breast implants for augmentation.

The company reported earnings on February 5, beating EPS estimates by $0.01 up 17.4% y/y and 9.7% from the last quarter. The company beat revenue forecasts by $37.55M up 11.7% y/y and 8% from the previous quarter. Net profit down 1.2% to $312.9M. Specialty pharmaceuticals net sales up 14% and core medical devices up 17%. The company offered soft guidance for Q1 as well as for 2014. The company is guiding Q1 EPS of $1.09-$$1.12 versus $1.21 and revenue of $1.525B-$1.6B compared to $1.6B. 2014 EPS of $5.36-$5.48 versus $5.46, revenue $6.65B-$6.95B compared to $6.78B. Announced Q4 dividend of $0.05.

Although results were mixed and guidance was soft, stock rebounded quickly following a 5% sell-off after BMO Capital said sell-off is short lived. The rebound continued with Capital Research Global Investors disclosing yesterday a 5.9% stake in the company as of December 31 2013. On the sell-side Wells Fargo was upbeat maintaining its Outperform rating following a meeting with Allergan's management and is more confident in the company's growth momentum and outlook for 2014 and views the guidance as very conservative. UBS has also reiterated its bullish stance maintaining a Buy rating with a price target of $138 suggesting a 13% premium to yesterdays close. Susquehanna is also positive citing results and guidance reinforce growth strategy derived from organic growth of core products and a product pipeline to add new growth drivers. The firm has a price target of $145. Citigroup was also positive on the stock with a Buy rating and a price target of $130 citing a third Restasis patent by the USPTO, extending through 2024. Current consensus rating for Allergan is Outperform with a price target of $127.76.

2014 catalysts may include data for DARPin study, bimatoprost, sales growth acceleration of Restasis X and reduction in restructuring costs, M&A whispers. Further details may be disclosed today at the Leerink Global Healthcare Conference.

Looking at the fundamentals Allergan's current P/E is 29.15, Forward P/E 20.04, PEG 2.36, P/S 5.78, P/B 5.63, Gross Margin 87.40%, Institutional Ownership 89.50% and an average ROI, ROE of 15%.

Based on the daily chart, the stock is looking to breakthrough its 52w highs at $123.83 made in January 17 currently forming a base just below. The stock moved above the 10MA and 20MA a couple of days ago and currently close to a bullish cross.