Allergan Earnings Are On Deck: Here's Why They Should Meet Expectations

Allergan PLC (NYSE: AGN) is scheduled to announce its second quarter financial results before the market opens on Thursday.

Ahead of the report, Evercore ISI analysts Umer Raffat and Dan Chung went through IMS data, pricing trends, transcripts, and other documents “to put everything in one place. Acknowledging limitations of IMS, analysis suggests Allergan should be able to meet consensus expectations,” the experts explain.

Their note includes a 40-page slideshow that looks into Allergan’s quarter, which is making investors somewhat nervous. Below are the main three reasons behind their worries.

1) The second quarter of 2014 establishes a hard-to-beat precedent. Legacy Allergan sales surged 16 percent year-over-year in the second quarter of last year.

2) This is the first full quarter with legacy Allergan.

3) Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA) “top-lined 2Q15 earnings along with generics acquisition ... but Allergan didn’t.”

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For the second quarter, Evercore ISI expects earnings of $4.39 per share on revenue of $5.7 billion despite FX headwinds. The analysts anticipate Legacy Allergan sales of $1.919 billion will be driven by Eye Care products ($841 million) and Botox ($621 million).

The analysts also notice that, in the first quarter call, management cited double-digit growth (on a constant currency basis) as of May 11 2015.

Key Issues For The Call

The slideshow goes on to look into some of the key issues to look for at the call:

• M&A priorities.
• Integration and revenue performance.
• FCF conversion.