Why Cowen Thinks Allergan Has Massive Upside To $400

• The share price of Allergan PLC (NYSE: AGN) has declined 17.25 percent over the past month, after having reached a high of $308.995 on August 31.
• Cowen’s Ken Cacciatore has maintained an Outpeform rating on the company, with a price target of $400.
• The company has provided its H2:15 guidance, while also offering visibility into its longer-term spending and margin targets, following the divestiture of its generics business to Teva Pharmaceutical Industries Ltd. (ADR) (NYSE: TEVA).

According to the Cowen report, “Despite some slight increases to operating expenses (SG&A), the topline growth continues to look solid and on track with expectations. Focus now returns to the likely capital deployment and its corresponding anticipated value creation.”

Analyst Ken Cacciatore also stated that guidance was in-line with expectations, while mentioning that branded revenue growth was expected at 10 percent, with gross margins of 77-79 percent, following the divestiture of its generics business. SG&A was also expected to be at around 21-24 percent and tax rate at about 15 percent.

Following the sale to Teva, Cacciatore believes that “while the recent decline in the biotechnology and pharmaceutical universe has been very painful, it does – perversely – create a potentially interesting opportunity for soon-to-be cash-rich Allergan.”

Successful capital deployment could generate significant value for the stock, Cacciatore added.