Allergan plc AGN is scheduled to report second quarter 2015 results before the opening bell on Aug 6. Allergan has had a strong run over the last four quarters with an average beat of 5.35%. Let’s see how things are shaping up for the second quarter announcement.
Acquisitions to Drive Earnings
Allergan’s top as well as bottom line should continue to be driven by the acquisition of Botox-maker Allergan Inc. as well as other acquisitions. Products like Bystolic, Lo Loestrin, Estrace and Minastrin should perform well. The company’s focus on the women’s health segment should lead to an improvement in the performance of products in this segment.
Investors will also be interested to hear about Namzaric’s performance. Namzaric was launched in the second quarter of 2015 and is expected to help reduce the impact of the Jul 2015 entry of Namenda IR generics. The performance of other new product launches like Avycaz (treatment for adult patients with complicated intra-abdominal and urinary tract infections) will also be in focus.
Allergan’s generic business is also expected to do well with the segment expected to continue to benefit from contribution from key products like the generic versions of Concerta though currency will have an impact on international sales. At the time of announcing first quarter results, the company had said that it has launched 20 generic products in the U.S., including generic Pulmicort, generic OxyContin, and generic ophthalmic products.
We note that Allergan recently entered into an agreement with Teva Pharmaceutical Industries Ltd. TEVA for the sale of its global generics business for $40.5 billion. The deal is slated to go through in the first quarter of 2016. Allergan will be treating its generics business as discontinued operations from the third quarter and will provide updated 2015 guidance by mid-to-late September.
With the company significantly focusing on its branded segment, pipeline updates are also eagerly-awaited.
Earnings Whispers?
Our proven model does not conclusively show that Allergan is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Allergan is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both $4.42 per share.
Zacks Rank: Allergan carries a Zacks Rank #3 (Hold). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
Dynavax Technologies Corp. DVAX has an earnings ESP of +0.95% and carries a Zacks Rank #3 (Hold). It is expected to report second quarter results on Aug 6.
BioDelivery Sciences International, Inc. BDSI has an earnings ESP of +6.45% and carries a Zacks Rank #3 (Hold). It is set to report second quarter results on Aug 10.
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