Mizuho Securities also raised the price target on Allergan plc considerably
Allergan plc Ordinary Shares (NYSE:AGN) has been upgraded to Buy at Mizuho Securities. The upgrade comes a few days after Allergan reported a weaker than expected Q2 and failed to meet the consensus revenue estimate by quite a margin. In the analyst’s opinion, the risk associated with the stock has been reduced significantly and the risk reward profile now presents a very positive picture.
The analyst believes that the reduced guidance for the upcoming quarters does not spell doom for the stock but is in fact a positive, as it has resulted in a more realistic outlook. The estimate for the stock are now within reasonable ranges and despite reduction, provide plenty of room for growth in terms of revenue.
The analyst believes that given the changes in the guidance, the stock is now more than likely to deliver a beat which will help in reinvigorating investors. The gross margins are also likely to expand over the next few quarters and will result in strong EPS beats down the line.
Botox is currently the most critical product for Allergen, asserts analyst. Societal norms and growing consciousness regarding physical appearances is likely to push Botox numbers even further, as it gaining rapid popularity not only among females but males as well.
According to a study done by an Australian dermatologist, Botox usage is expected to rise 50% in the next few years. Apart from Botox, the management guides for about 10% growth in overall business during the year 2017.
The stock has the ability to perform and deliver under pressure and given the more realistic assumptions, the risk associated is at its lowest. Mizuho upgraded the stock to Buy from Hold and raised the price target to $318 from $246. The analyst ratings for the stock have eight buy, eight outperform and four hold ratings. The stock now trades at a price of $252.93.