Allergan (AGN) Down 5.9% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Allergan (NYSE:AGN). Shares have lost about 5.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Allergan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Allergan Surpasses Q4 Earnings and Sales Estimates

Allergan beat estimates for both earnings and sales in the fourth quarter.

Adjusted earnings came in at $5.22 per share, beating the Zacks Consensus Estimate of $4.61. Earnings rose 21.7% year over year driven by higher revenues and lower tax rate.

Revenues came in at $4.35 billion, which exceeded the Zacks Consensus Estimate of $4.1 billion. Revenues rose 6.6% from the year-ago quarter as higher sales of key products like Botox (cosmetic and therapeutics), Juvéderm collection of fillers, Vraylar, Linzess and Lo Loestrin made up for the loss of exclusivity on some brands and currency headwinds.

Segment Discussion

Allergan reports revenues under three segments – U.S. General Medicine, U.S. Specialized Therapeutics and International.

U.S. Specialized net revenues rose 0.7% to $1.82 billion. Strong demand for its facial aesthetics products, Botox and Juvéderm and Botox Therapeutic was offset by decline in sales of Restasis and CoolSculpting.

In Facial Aesthetics, Botox (cosmetic) recorded sales of $271.8 million, up 5.3% year over year. Juvéderm collection of fillers rose 5.1% to $166.4 million. Alloderm sales rose 10.3% to $104.7 million. CoolSculpting sales of $53.3 million declined 34.4% year over year.

In Eye Care, while Ozurdex sales rose 7.8% to $31.6 million, Restasis sales fell 4.9% to $309.0 million.

Botox Therapeutic revenues were $463.0 million, up 6.9% year over year.

U.S. General Medicine net revenues were up 15.2% year over year to $1.61 billion in the reported quarter as strong demand for Vraylar, Viibryd, Linzess and Lo Loestrin was offset by lower sales of drugs that lost exclusivity.

Vraylar sales were $283.1 million in the quarter, 88.1% higher than the year-ago quarter. Linzess sales rose 12.7% to $231.2 million. Lo Loestrin sales grew 8.6% to $156.2 million while Bystolic sales rose 11.8% to $169.6 million. Viibryd sales were $114.2 million, up 19.6% from the year-ago quarter.

The International segment recorded net revenues of $917.7 million, up 8.1% from the year-ago period, excluding the impact of foreign exchange due to growth in Facial Aesthetics, Ozurdex and Botox (therapeutic).

Profits Rise

Adjusted operating income rose 8.4% to $2.08 billion in the quarter due to higher revenues and lower R&D costs.

Selling, general and administrative expenses increased 1.9% to $1.16 billion in the quarter, owing to higher marketing spending to support product launches.

Research and development (R&D) expenses declined 4.9% to $414.8 million.

2019 Results

Full-year 2019 sales rose 1.9% to $16.1 billion, beating the Zacks Consensus Estimate of $15.81 billion and ahead of the guided range of $15.63-$15.83 billion.

Adjusted earnings of 2019 of $17.64 per share beat the Zacks Consensus Estimate of $16.89. Earnings rose 5.7% year over year and were well above the guidance of $16.55 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Allergan has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Allergan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.