Allergan is part of the skin care revolution

Posted Mar 4th 2008 6:39PM by Joseph Lazzaro
Filed under: Allergan (AGN), Stocks to Buy

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Allergan.

Allergan, Inc. (NYSE: AGN) is a leading producer of ophthalmic, neuromuscular and skin care pharmaceuticals, and, via its March 2006 acquisition of Inamed Corp., aesthetic products.

Analysts see 10-13% revenue growth in 2008, but with U.S. sales growth dampened by the slow-growth U.S. economy. International markets accounted for about 34% of sales.

Concerning Botox, so far there has been no slowdown for therapeutic of cosmetic use, but the latter may record slower growth if U.S. discretionary purchases decline, in the quarters ahead.

Margins should remain adequate. The Reuters FY 2008/FY 2009 EPS consensus estimates for AGN are $2.58 to $3.09.

The risks? Analysts are keeping an eye on the aforementioned discretionary spending metric, for signs that it may crimp AGN's sales, as well as for any slowdown in international markets.

The First Call mean rating for AGN is: Buy [18 firms]. Mean 2008 target: $75 [high: $80, low: $68].

Stock Analysis: Allergan is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from AGN's shares. Sell/Stop Loss if you were to purchase shares in this company: $42.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: AGN, Allergan, Botox, eye care, health care, skin care