Thin Is In as Allergan Dodges Generics Bullet -- Heard on the Street
09 Mai 2017 - 5:52PM
Dow Jones News
By Charley Grant
A series of acquisitions helped turn Allergan into a
pharmaceuticals giant, but shareholders should be most grateful for
what is no longer in its portfolio.
That is the clear takeaway from first-quarter results out
Tuesday morning. Allergan reported revenue of $3.6 billion and
adjusted earnings of $3.35 a share, narrowly topping expectations.
Familiar products led the way with sales of workhorse drug Botox
12% higher than a year ago.
The star of the show, though, had exited stage left. Allergan's
$40 billion sale of its generics unit to Teva Pharmaceutical
Industries, which closed last summer, was exceptionally well timed
for the seller. Allergan has used the proceeds to buy back stock,
invest in new experimental drug candidates and pay down some
debt.
The generics industry is currently struggling with falling
prices of drugs as well as a wide-ranging collusion investigation
by the Justice Department. Allergan, meanwhile, is up 13% over the
past 12 months as most generics stocks have plummeted.
There are hurdles to be cleared if Allergan's stock is to keep
rising. It carries nearly $23 billion in net debt on its balance
sheet. That would sting if Botox sales lose steam. At 15 times this
year's expected adjusted profit, new products like Kybella, a
treatment for chin fat, and Coolsculpting, a noninvasive fat
reduction device, will need to blossom to increase that
valuation.
But those balance sheet worries would be far more severe if the
generics unit hadn't been sold. And while Allergan's spending spree
on new drug candidates isn't without risk, there is significant
upside if things go well in the clinic.
Allergan shareholders have reason to keep their noticeably
slimmer chins up.
Write to Charley Grant at charles.grant@wsj.com
(END) Dow Jones Newswires
May 09, 2017 11:37 ET (15:37 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Teva Pharmaceutical Indu... (NYSE:TEVA)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Teva Pharmaceutical Indu... (NYSE:TEVA)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024