Sector News

Allergan investors still too 'skeptical' about a Pfizer merger, analyst says

December 2, 2015
Life sciences

Shortly after Pfizer and Allergan last week announced they’d be joining hands, the market “seemed pretty skeptical,” in the words of Jim Cramer, host of CNBC’s “Mad Money.” Since then, Allergan’s stock has rebounded–but the way Nomura analyst Shibani Malhotra sees it, investors still aren’t wrapping their heads around the deal’s potential long-term value.

As she wrote in a Monday note to clients, Allergan shares are currently trading 15.9% below the $370.53 value the merger implies, suggesting that “the combined entity remains underappreciated and un-reflected” in the Dublin drugmaker’s price.

So what are investors failing to take into account? A few things, she wrote. First off, locating the new company in Ireland should enhance financial flexibility–a quality that could result in the pharma beefing up a dividend she says is currently overlooked. The current Allergan price reflects no more than $52 in dividends, she pointed out, and she estimates that Pfizer’s stated dividend plan will offer $52.53 in present value.

Then, there’s Pfizer’s “far-reaching global footprint,” she noted, which Allergan has said could help it penetrate key markets like China and Japan. Malhotra, for her part, highlighted opportunities in Asia for Allergan’s ophthalmology meds and expansion of its gastroenterology franchise in Europe.

“All of these should drive operating leverage and provide upside to guidance,” she wrote.

To top it off, key Allergan execs–like current CEO Brent Saunders, set to take over the COO role, and chairman Paul Bisaro, who will take a seat on the new company’s board–are planning to stay on after the deal closes, which “should enhance the sharing of cross-firm best practices and potentially provide for improved execution,” Malhotra figured.

She’s not alone in her thinking. As Saunders recently told Cramer, there’s a lot to be gained now that the company is taking its “growth pharma” model and philosophy and putting it “on a larger chassis called Pfizer.”

“Look, we could have gone to $400 [dollars per share] on our own, but this takes us well beyond that for the foreseeable future,” he said.

By Carly Helfand

Source: Fierce Pharma

comments closed

Related News

October 2, 2022

GSK names Julie Brown, a 25-year AstraZeneca veteran, its first woman CFO

Life sciences

Five years ago, GSK made headlines when it hired Emma Walmsley to become the first woman to run a major pharmaceutical company. Now the Big Pharma has brought in another woman to control the company’s finances. Julie Brown will be GSK’s next chief financial officer. Brown, currently the chief operating and financial officer at fashion and beauty brand Burberry Group, is set to replace Iain Mackay.

October 2, 2022

Moderna creates new launch preparation role, poaches Novartis exec as manufacturing lead

Life sciences

Moderna created a new role responsible for “building out the company’s organization to support its growing pipeline.” Starting first thing 2023, Juan Andres, Moderna’s manufacturing head, will step into this new role under the title president of strategic partnerships and enterprise expansion, the company said Thursday.

October 2, 2022

Torrent Pharma to acquire Curatio for $245.16m

Life sciences

The latest takeover is anticipated to boost the presence of Torrent in the dermatology segment. Indian company Torrent Pharmaceuticals has signed a definitive agreement for the complete acquisition of Curatio Healthcare for $245.16m (Rs20bn).