Allergan Stock Analysis: Renewing Confidence in 2017

This article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Allergan Stock Analysis


  • Allergan (AGN) Stock Analysis
  • I Know First Algorithm Bullish Forecast For AGN

Allergan (AGN) Stock Analysis


Allergan plc (AGN), headquartered in Dublin, Ireland, is a bold, global pharmaceutical company and a leader in a new industry model – Growth Pharma. Allergan is focused on developing, manufacturing and commercializing branded pharmaceuticals, devices and biologic products for patients around the world. Allergan markets a portfolio of leading brands and best-in-class products for the central nervous system, eye care, medical aesthetics and dermatology, gastroenterology, women’s health, urology and anti-infective therapeutic categories. Allergan is an industry leader in Open Science, the Company’s R&D model, which defines their approach to identifying and developing game-changing ideas and innovation for better patient care. This approach has led to Allergan building one of the broadest development pipelines in the pharmaceutical industry with 70+ mid-to-late stage pipeline programs in development.

AGN price per share currently stands at $210.01 as of December 30, 2016, gaining 1.35% or $2.80 since its previous close on December 29, 2016. AGN, according to the S&P 500, has been one of the worst performing stock in 2016. In 2016, Actavis and Allergen merged seamlessly and Allergan also sold the generics business to Israel’s top pharmaceutical company, Teva. With these successful hurdles, the company also had downfalls, leading to its reputation of being one of the worst performing stocks. Firstly, management in 2016 invested their time and effort into transformation of the company, leading to investor confusion which then led to loss of faith by investors. Lastly, in the last few months of the year, consensus on earnings decreased from $17 billion to $15.3 billion. Shares for AGN have also decreased, as there has been a loss of 40% year to date. AGN’s Q3 earnings report estimates weren’t reached, creating a less than lustrous forecast for the rest of the year.


In 2016, AGN was preparing for its successful future. Selling the generic business to Teva will prove lucrative. AGN is no longer needed for generic because their goal is inevitably become a leading growth pharmaceutical company. The downgrade on estimates was due to an unstable practice that included yearly increase in estimates by 10%. Therefore the estimate downgrade was simply to move it to a more reasonable price.

On December 20, AGN announced that they will also acquire LifeCell, a regenerative medicine company, for $2.9 billion. This will be paid in cash, meaning that the company will not be adding debt. This is a step in the right direction, as 2017 will be the year that AGN will break out of its bad luck in the market. Through the acquisition, AGN will gain “high-quality and durable portfolio of dermal matrix products with Allergan’s leading portfolio of medical aesthetics, breast implants and tissue expanders”These regenerative products will yield immense opportunity to AGN as it will open up markets globally for plastic and general surgery customers. LifeCell assets are estimated to generate about $450 million more revenue in 2016, an approximate increase of 75% in gross margins and 40% operating margins. Apart from the new products it will attain from LifeCell, AGN will also acquire the company’s manufacturing capabilities as well as its research and development operations that are located in New Jersey.


Possibly due to the positive outlook in 2017, short interest in AGN has dropped 14,879,302 shares to 25,269,718 which equates to a decrease of 37% in just 15 days between 11/30/2016-12/15/2016. This generally means that short sell investors do not see any more potential for the company to decline further, corroborating the new positive forecasting for AGN.

I Know First Algorithm Bullish Forecast For AGN

I Know First currently maintains a bullish stance on AGN with signal strength 108.67 and predictability 0.72 for 1 year forecast.

Allergan Stock Analysis

In the past I Know First was also bullish on AGN. This bullish forecast on AGN was sent to current I Know First subscribers on May 15, 2016, where AGN had a signal of 13.27 and a predictability of 0.12. AGN reached 2.64% in returns.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.


This year will be one of growth for Allergan, all of the changes in the last year that weighed the company down, were just building blocks to achieve bigger and better goals.