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Allergan Inc. (AGN - Analyst Report) is scheduled to report fourth quarter 2013 results before the opening bell on Feb 5.

Last quarter, Allergan had posted an earnings surprise of +1.65%. We expect the company to beat expectations in the fourth quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Allergan is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.75%. This is a very meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #2 (Buy): Note that stocks with Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Allergan’s Zacks Rank #2 (Buy) and an earnings ESP of +0.75% makes us confident of an earnings beat on Feb 5.

What is Driving the Better-than-Expected Earnings?

Allergan has delivered positive earnings surprises in the last three quarters with an average beat of 1.80%.

Botox and Restasis should continue to boost revenues. The specialty pharmaceuticals segment should see strong sales and facial aesthetics should also perform well.

Other Stocks to Consider

Allergan is not the only company looking up this earnings season. We also see likely earnings beats coming from these companies in the health care sector:

Sanofi (SNY - Analyst Report) has an earnings ESP of +2.27% and holds a Zacks Rank #3. Sanofi will report fourth quarter earnings on Feb 6.

Actavis plc (ACT - Analyst Report) has an earnings ESP of +0.66% and holds a Zacks Rank #1 (Strong Buy). Actavis will be reporting fourth quarter earnings on Feb 20.

Mallinckrodt plc (MNK - Snapshot Report) has an earnings ESP of +4.69% and holds a Zacks Rank #2 (Buy). Mallinckrodt will report first quarter fiscal 2014 earnings on Feb 6.
 

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