AGN's Wrinkles Need Smoothing

Allergan, Inc. (AGN - Analyst Report) recently announced that it has completed a top-line analysis of its two phase III clinical trials exploring the use of Botox for the prophylactic treatment of headache in adults suffering from chronic migraine.

From a fundamental standpoint, we are enthusiastic about the future of Allergan. The company possesses a strong blockbuster product in Botox and a slew of innovative new products in the eye and skin care markets. Both Botox and Juvederm should help the company strengthen its position in the dermatology and plastic surgery market. We were also pleased to hear about the U.S. approval of silicone breast implants.

We believe its recent acquisitions will provide Allergan with the opportunity to drive growth in its existing business and to expand into new areas of business. Even in the face of slowing consumer spending in the U.S., the company's presence across different segments and geographies should help maintain decent growth going forward.

Although the shares reacted positively to the recently released top-line results on Botox for the treatment of migraine, we believe that several issues are likely to keep a lid on the share price in the near-term. These issues include safety concerns surrounding the use of Botox and a subpoena from the Department of Justice, U.S. Attorney's Office for the Northern District of Georgia, related to promotional, educational and other activities for Botox. We maintain a Hold rating on the stock with a price target of $62.

Arpita Dutt, CA, contributed to the report.

Read the full analyst report on AGN