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Specialty-drug giant Allergan ( AGN ) got conflicting messages from Wall Street on Friday, as Goldman Sachs put the stock on its Conviction Buy list, while Mizuho lowered its price target, due to differing opinions about the company’s near-term strategy. Goldman analyst Jami Rubin wrote in a research note that after meeting with top executives, she believes the company is on track to deliver sustainable double-digit top-line growth and margin expansion. Rubin added that near-term catalysts include the closing of Allergan’s $40 billion sale of its generics business to Teva Pharmaceutical Industries ( TEVA ), which both Teva and Allergan confirmed this week will happen next month, as well as the potential $10 billion share buyback Allergan unveiled during its Q1 earnings report on Tuesday. For Rubin, Allergan’s decision to scale back its acquisition strategy in favor of the stock buyback makes sense. “We believe Allergan management is listening to shareholders and placing capital deployment priorities on unlocking value by investing in the most attractive assets available — Allergan shares,” Rubin wrote. Mizuho analyst Irina Koffler, however, found the shift less than inspiring. “Aside from a large $5-billion-to-$10-billion share buyback, management is not pursuing any transformational changes to the business (as expected), and (we) are less excited by an execution story,” she wrote in a research note, lowering her price target to 232 from 250, while affirming a neutral rating. The market seemed to be siding with Goldman. Allergan stock was up nearly 3% in morning trading on the stock market today , near 222. But Allergan shares are still down nearly 30% this year, and they plunged 15% on April 5 after the company and Pfizer ( PFE ) called off their $160 billion marriage as the Treasury Department issued new rules to discourage mergers that would enable U.S. companies to move their headquarters to lower-tax countries, such as Allergan’s home base of Ireland. Scalper1 News
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