Carl Icahn dropped a note today that he’s now long one of the more interesting large-cap big pharma stocks, AGN.
Per Icahn, he recently acquired a large position in Allergan and is “very supportive of CEO Brent Saunders. We were instrumental in bringing Brent on board as the new CEO of Forest Labs a few years ago and worked cooperatively and constructively with him to help increase value for all Forest shareholders. Less than a year later Forest was acquired by Actavis (which subsequently merged with Allergan) resulting in massive gains for Forest shareholders. While we at that time disposed of our position in Forest, we still have always maintained great respect for Brent. We have every confidence in Brent’s ability to enhance value for all Allergan shareholders.”
Morgan Stanley recently discussed the AGN/TEVA deal, stating:
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Overall, AGN near-term generic trends have been impacted by several factors, including incremental competition on a handful of key products and the lack of sizeable new product launches (aside from Crestor). While this will likely result in a modestly lower AGN generic contribution relative to initial Street expectations, we believe it is (1) largely reflected in shares at ~9x 2017 EPS, and (2) very manageable, particularly given the strength of Teva’s global generic platform and a best-in-class pro-forma pipeline, as well as other P&L offsets.
In a recent research report on AGN Goldman Sachs noted:
Our analyst sees the potential for AGN’s risk profile to change significantly following the proposed sale of its generics business to TEVA in June and recommended buying Aug-16 $245/$270 Call Spread with the catalyst being the generics sale to TEVA.
Allergan might be worth a deeper dive. The company took a hit after the government blocked its merger with Pfizer. We’ve rolled out the billing feature for our premium product. You can now choose how to be invoiced, as well as how and when you want to pay.
AGN – merger?
Now, Allergan is the maker of Botox and Juvederm. By all accounts, Icahn hasn’t shown up to push for change here or another mega-merger. This will be somewhat of a passive stake for him. He’s looking to capitalize on the selloff and ride the Brent Saunders wave. Shares are down nearly 30% from their 52-week high and off 23% this year.
Don’t forget: We’ve rolled out the billing feature for our premium product. You can now choose how to be invoiced, as well as how and when you want to pay. Check it out here.