Allergan Hikes Quarterly Dividend By 2.8% Ahead Of Q4 Results

Allergan plc (NYSE:AGN) announced that its board has approved a 2.8% hike in quarterly cash dividend on common stock to 74 cents per share from the earlier payout of 72 cents. The revised amount will be paid on Mar 15 to shareholders of record as of Feb 15, 2019.

The annual general meeting of shareholders will be held on May 1, 2019 in Dublin, Ireland. Allergan’s board has set a record date of Mar 5 for deciding on the shareholders, who are eligible to vote at the meeting.

The increased dividend for 2019 indicates a strong long-term business strategy and the capital allocation priority of Allergan. The company remains committed to also raise its dividend in the future quarters.

We like to remind investors that in November 2016, Allergan announced the initiation of a dividend. This was after the erstwhile Actavis bought Botox maker Allergan Inc., in 2015 and changed its name to Allergan. The company later sold its generics business in August 2016 and the Anda distribution business to Teva Pharmaceutical Industries Limited (NYSE:TEVA) in October 2016. It paid out the first dividend of 70 cents in February 2017.

Notably, Allergan is scheduled to report fourth-quarter and full-year 2018 results on Jan 29. We believe that Allergan’s key products, namely Botox, Juvéderm collection of fillers, Vraylar, Alloderm, Linzess and Lo Loestrin are likely to push up sales in the quarter to be reported.

However, revenues in the fourth quarter are expected to be hurt by the recall of Ozurdex from the international markets in October, currency translation and lost revenues due to the sale of medical dermatology assets in September 2018.

Meanwhile, lower sales of Namenda XR and Estrace cream due to generic competition are expected to persistently drain Allergan’s revenues in the fourth quarter.

While a generic version of Alzheimer’s treatment — Namenda XR — was launched by India-based company Lupin in February 2018, the same of Estrace cream was unveiled by Mylan (NASDAQ:MYL) last January.

However, no generic version of Restasis, Allergan’s second best-selling drug, has been introduced yet. The delay in launch of Restasis generics may add to the top line in the fourth quarter.

Shares of Allergan have lost 14.2% in the past year, narrower than the industry’s decline of 20.4%.

Zacks Rank & Stock to Consider

Allergan currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the pharma sector is Eli Lilly and Company (NYSE:LLY) , which has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eli Lilly’s earnings estimates have moved 1.4% north for 2019 over the past 60 days. The stock has surged 31.2% in a year.

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