Allergan, Inc.’s (AGN) third quarter 2011 earnings of 92 cents per share was a penny above the Zacks Consensus Estimate and a few cents above the guidance range of 88-90 cents. Earnings increased 17.9% from the year-ago quarter.
Revenues
Revenues increased 9.9% to $1,328 million, in line with the Zacks Consensus Estimate. Specialty pharmaceuticals sales increased 10.1% to $1,089.7 million, with eye care pharmaceutical sales increasing 7.5%. Products like Lumigan and Restasis helped drive eye care sales.
Alphagan and Combigan franchise sales increased marginally (0.7%) to $100.5 million in the reported quarter. New product Latisse contributed $21.8 million to third quarter sales.
Botox sales increased 16.1% year over year to $396.7 million. However, sales declined on a sequential basis. Recent approvals for indications like chronic migraine and urinary continence in adults with neurologic conditions should help boost Botox sales.
Meanwhile, Allergan’s medical devices segment posted sales of $221.4 million, up 9.2%. While breast aesthetics sales increased 11.2% to $83.3 million, facial filler sales shot up 29.1% to $88.4 million.
However, obesity intervention segment continued to disappoint, with sales declining 16.2% to $49.7 million. We note that sales of all the divisions in the medical devices segment declined on a sequential basis.
Other Details
Selling, general and administrative (SG&A) expenses upped 9.9% during the quarter to $517.1 million. Research and development (R&D) expenses amounted to $221.3 million, up 14.1%.
2011 Guidance Revised
Allergan increased it 2011 earnings guidance to a range of $3.62–$3.64 per share from a range of $3.59–$3.63. Allergan expects net product sales to range from $5,295 – $5,370 (previous guidance: $5,220–$5,370 million). The Zacks Consensus Estimate is already towards the higher end of the guidance range at $3.64 per share.
For 2011, Allergan expects total specialty pharmaceuticals net sales in the range of $4,385–$4,440 million (previous guidance: $4,310–$4,440 million). Botox sales are expected in the range of $1,570–$1,600 million, as against the previous guidance of $1,550–$1,590 million.
Medical devices net sales are still expected in the range of $910–$930 million in 2011. Here, performance will be driven mainly by facial aesthetics (guidance: $360–$370 million). The US approval of Juvéderm XC, Allergan’s latest facial filler product, should help drive facial aesthetics sales. Allergan is also seeking FDA approval for Juvéderm Voluma with lidocaine injectable gel, a next generation hyaluronic acid dermal filler for volumizing the mid-face.
During the fourth quarter of 2011, Allergan expects to earn 97-99 cents per share on total product net sales of $1,330–$1,405 million. The Zacks Consensus Estimate is above the guidance range at $1.01 per share.
Allergan also declared a dividend of 5 cents per share for the third quarter.
Outperform on Allergan
We recently upgraded Allergan to Outperform. We believe that Allergan’s presence across different segments and geographies will help maintain growth going forward.
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