Tags: Allergan | cash | products | AGN

Allergan a Mixed Pharma Play with Cash Products Sales

By Greg Brown   |   Saturday, 18 Aug 2012 02:33 PM

Allergan (AGN) is a mixed pharma play, relying in part on cash products sales that are unreimbursed by insurance and thus largely dependent on the incomes of patients. That might seem like a weak point, but analysts see the glass half-full.

Allergan is a multi-specialty healthcare company focused on developing and commercializing innovative pharmaceuticals, biologics, medical devices and over-the-counter products.

It discovers, develops and commercializes a diverse range of products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets in more than 100 countries around the world.

Allergan also is a pioneer in specialty pharmaceutical, biologic and medical device research and development, management said in a recent filing.

“Our diversified business model includes products for which patients may be eligible for reimbursement and cash pay products that consumers pay for directly out-of-pocket.” management said.

“Based on internal information and assumptions, we estimate that in fiscal year 2011, approximately 60 percent of our product net sales were derived from reimbursable products and 40 percent of our product net sales were derived from cash pay products, including products in emerging markets that would typically be reimbursed in North America and Europe.”

Allergan has a market cap of $26.64 billion in a sector, pharmaceuticals, where the average company size is $23.55 billion. Its trailing 12-month P/E ratio is 25.4 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.88, compared to 3.33 for the sector.

Its projected earnings per share growth for the coming year is 14.39 percent, compared to a sector average of 6.36 percent.


Multiple catalysts


Analysts are positive on AGN, with buy or outperform calls from Deutsche Bank, Leerink Swann, RBC Capital Markets, Smith Barney, Standard & Poor’s Equity Research, Stifel Nicolaus, and UBS.

“We view AGN as one of the best positioned players in the specialty drug space, with multiple catalysts in place to fuel strong EPS growth over the coming years. Key drivers, in our opinion, are strength in Botox, helped by new indications and recent elimination of a competitor, and a robust R&D pipeline,” S&P analysts wrote in mid-June.

“Key opportunities we see include new uses for Botox to treat incontinence and enlarged prostates, senrebotase for pain, and Levadex for migraine.”

Allergan next reports on Oct. 31.

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