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Is Allergan A Buy Or Not? It Depends On Whom You Ask

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.

Symantec To Cut 1,200 Jobs, Close Offices After Q4 Sales Miss

Symantec ( SYMC ) is cutting 1,200 jobs and closing a quarter of its offices as part of a broad $400 million cost reduction plan, the No. 3 cybersecurity firm announced Thursday as it reported fiscal Q4 sales that missed Wall Street views. On Friday, William Blair analyst Jonathan Ho said he was “perplexed” by the cuts at a time when older, legacy players like Symantec need to work to catch up with next-generation vendors such as Palo Alto Networks ( PANW ). “We are perplexed at how the company plans to reposition itself as a next-generation security player and reaccelerate growth, while simultaneously reducing spending and headcount,” Ho wrote in a research report. But he called the strategy “ambitious” and maintained his market perform rating on Symantec stock. In morning trading on the stock market today , Symantec stock was up a fraction, near 17. Shares began forming a handle on March 21, but they have since fallen 10%, matching an equal decline in IBD’s 26-company Computer Software-Security industry group. For its fiscal Q4 ended April 1, Symantec reported $873 million in sales and 22 cents earnings per share minus items, down a respective 6% and 24% year over year, but in line with the company’s preannouncement. Both metrics lagged the consensus of 29 analysts polled by Thomson Reuters for $878.7 million in revenue and 23 cents EPS. Symantec’s $3.6 billion in fiscal 2016 sales met the consensus model, but $1.03 EPS ex items missed by a penny. On a year-over-year basis, the measures fell 10% and 21%, respectively. Adjusting for currency, consumer sales fell a respective 7% and 9% during fiscal Q4 and fiscal 2016, leading 4% and 2% declines in enterprise sales. Symantec blamed the enterprise decline on a shift in customer spending toward subscriptions and away from licenses. Ho said the accelerating migration to next-generation subscription products disfavors a legacy player like Symantec. “We remain concerned that the long-term transition away from legacy antivirus to next-generation solutions may be happening at an accelerating pace, which could be a headwind to Symantec’s legacy business,” he wrote. Current-quarter guidance for $865 million to $895 million in sales and 24-26 cents EPS minus items would be down 4% at the midpoints. For fiscal 2017, Symantec guided to $3.49 billion to $3.58 billion, which would be down 2% at the midpoint but better than the 10% decline in fiscal 2016. Symantec’s job cuts represent about 9% of its workforce and will save about $100 million, CFO Thomas Seifert told analysts on the company’s earnings conference call late Thursday. As of Thursday, Symantec’s 11,223 headcount was already down 43% from a year ago. The company hopes that closing 25% of its facilities will save another $35 million. The company also plans to trim target service agent and IT costs “stranded” after the Veritas divestiture, and it is reining in $100 million in spending. Symantec early this year completed the sale of data storage software maker Veritas to a group led by private-equity firm Carlyle Group ( CG ) for about $5.3 billion after taxes.

Cars Will Drive Themselves By 2019, Says Mobileye Chairman

The chairman of high-tech auto supplier Mobileye ( MBLY ) says the company has made deals with two automakers to create fully self-driving cars by 2019. The Wall Street Journal reported in an interview with Amnon Shashua late Thursday that 2019 will be an “inflection point” for the auto industry, as it shifts from semi-autonomous to fully autonomous vehicles. Shashua, who is also Mobileye’s chief technology officer, didn’t name the two automakers in question, but a number of companies have been working in the field, from traditional automakers like General Motors ( GM ) and Ford ( F ) to the electric-vehicle startup Tesla ( TSLA ), which Mobileye already supplies with driver-assistance technology. Mobileye stock was up 2% in early trading on the stock market today , near 37.50. After last week’s Q1 earning report , the stock retains its highest-possible IBD EPS Rank of 99, but its Accumulation/Distribution grade has been getting worse, now down to a D+, which indicates institutional investors are mostly selling, not buying, shares.