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Bloomberg
Allergan has a valuation problem and investors want to know what management is going to do about it. Shares have given up 37 percent of their value in the past nine months amid patent issues and competitive pressures.
CEO Brent Saunders is sure to face questions on the company’s strategic review during Monday’s earnings call. In March, he promised that the drugmaker would consider every option “with a sense of urgency.†Since then Allergan briefly entertained bidding for Shire but quickly shelved plans after shares sank on the news.
RBC analyst Randall Stanicky would rather see Allergan turn to asset sales instead of a big M&A deal, and investor reactions to the Shire flirtation confirm he’s not alone. Focusing on the company’s higher-growth assets and shedding its mature ones could be the key to unlocking value, Stanicky said. “Presumably you’d get a premium†over just splitting those assets up, he said. A key part of his outperform thesis is based on Allergan successfully solving this problem, he said. The Street is also hoping that the company will raise its 2018 forecast, Stanicky said. is based partly on the timing for a generic Restasis entrant and on expectations that the core business will perform well.