Allergen (AGN): $185-$200 Per Share Needed to Get Deal Done, Says BTIG (VRX)

BTIG maintained a Buy rating on Allergen (NYSE: AGN) with a price target of $190. Comments follow news it rejected Valeant Pharmaceuticals's (NYSE: VRX) takeover proposal. Analyst Sean Lavin said he was surprised by the aggressiveness and detail provided on today’s call. Overall, he thinks $185-$200 per share will be need to make the deal happen.

"While we are not surprised that AGN turned down the proposal and we felt AGN fundamentally differs from the way VRX does business, we were surprised by the aggressiveness and detail given on today’s call. In addition to increasing EPS growth targets to 25% in 2015 and a 20% CAGR for the next five years, AGN questioned the sustainability of VRX’s business model, feels there is significant risk in its shares, discussed Valeant’s organic same store growth which it characterized as near zero, showcased that AGN shares have appreciated ~2000% since 1998, and showed where R&D has led to or will lead to billions in sales," said Lavin.

"Additionally, AGN has ~$200M in annual R&D commitments to required post approval studies which VRX would need to continue or take products off the market. Finally mgmt. questioned how long Congress will allow tax inversion with such benefits to continue, adding that AGN’s board believes tax rate differences will be decreased by Congress," said Lavin, adding that "With increased earnings, we now believe $185-$200 would likely be needed to get this deal done."

For an analyst ratings summary and ratings history on Allergen click here. For more ratings news on Allergen click here.

Shares of Allergen closed at $161.30 yesterday.

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