Allergan (AGN) Stock: Keep On Buying This Botox Baron

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Have you ever heard the expression, if all you have is a hammer, then everything begins to look like a nail.

Allergan185Well, that’s analogous to pharmaceutical firm Allergan, Inc (NYSE:AGN) and Botox. The firm, which started with one of the first commercially available sinus antihistamines more than six decades ago, has built its newest empire on Botox and all its iterations.

Granted, Allergan has other divisions, like its opthalmic business, but the 800-pound gorilla is Botox.

And having recently reported earnings, everything is going quite well with the business.

What Is Botox?

Unless you live under a rock, and you haven’t read a newspaper or seen TV in the past 10 or 20 years, you’ve heard of Botox. But what is it?

Technically, Botox is a drug prepared from the bacterial toxin botulin, used medically to treat an array of muscular and cosmetic conditions.

Botulin is the bacteria that causes botulism, a form of illness usually that food or water borne. For Botox purposes, botulin has been de-fanged, and its more productive qualities have been kept and used extensively in various forms.

From urologics, to dermatology to cosmetic restoration, it has become a major global trend, especially for temporary cosmetic applications like removing wrinkles. And because its a naturally occuring organism, there are few side effects to treatment and you can use it with frequency — and it’s a much cheaper option than cosmetic surgery.

Allergan’s Next Iteration

In November 2014, after a battle with hedge fund activist Bill Ackman and Valeant Pharmaceuticals International Inc (NYSE:VRX), AGN decided to take a deal from Ireland-based specialty pharmaceutical maker Actavis plc (NYSE:ACT).

While Bill Ackman lost the deal, he made $2.6 billion on the deal, but the real winner is current AGN shareholders. Allergan continues to beat earnings estimates and once digested into ACT, it will have even more growth potential.

AGN stock is trading at a premium to its takeover price at this point precisely because of its growth potential.

Technically, Allergan stock is in good shape, and fundamentally, AGN continues to nail its numbers quarter after quarter.

Given the fact that AGN will soon become ACT, it’s encouraging that ACT has a significant generic and over-the-counter business, which may become a very lucrative channel for AGN products in coming years.

Plus, ACT’s global reach will help AGN expand its business into markets that have been untapped up to now.

There’s plenty of shareholder value left for long-term investors in Allergan.

Louis Navellier is the editor of Blue Chip Growth.


Article printed from InvestorPlace Media, https://investorplace.com/2015/02/allergan-agn-botox-bill-ackman-actavis-act/.

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