Source: The Street
NEW YORK — Specialty pharmaceutical company Actavis (ACT) reported fourth-quarter and full-year earnings results Wednesday that beat analysts’ estimates. And the company, which late last year inked a deal to acquire Allergan (AGN), maker of anti-wrinkle treatment Botox, for $66 billion, said it will adopt Allergan as the name of the combined entity.
“The pending combination of Actavis and Allergan will create a dynamic new breed of company — a leader in Growth Pharma,” said CEO Brent Saunders in a statement. “By adopting the Allergan name for the corporation we will ensure that our corporate identity reflects the dramatic evolution of our company within the pharmaceutical industry.”
The deal was last year’s biggest pharmaceutical transaction. Allergan had been in a months-long hostile takeover fight with Valeant Pharmaceuticals (VRX) , an attempt promoted by activist investor and billionaire hedge-fund manager Bill Ackman. Valeant offered $180 a share for Allergan. But Actavis moved in with a better offer and prevailed, agreeing to pay $219 a share in a cash-and-stock deal.
While appearing on CNBC’s “Squawk Box” Wednesday, Actavis CEO Brent Saunders said he expects the deal to close “within the first quarter.”
Saunders also praised Allergan’s 65-year history and its customer-focused model. “Using the Allergan name for our combined brand product portfolios recognizes this powerful heritage,” he said. “And it will communicate unequivocally what we stand for in the brand pharmaceutical space.”
Helped by higher sales of its branded drugs in North America, Parsippany, N.J.-based Actavis posted revenue of $4.06 billion, surging 46% year over year, and topping estimates of $3.88 billion. Of that total, 45% ($1.83 billion) came from North America, where revenue nearly tripled.
For the quarter that ended in December, the company reported a loss of $732.9 million, or $2.76 per share, exceeding last year’s mark of $148.4 million, or 86 cents per share. But on an adjusted basis, excluding one-time gains and costs, earnings were $3.91 per share, enough to beat estimates of $3.67, according to Thomson Reuters.
For the year, the company reported a wider loss, reaching $1.63 billion, or $7.42 per share. Revenue was reported as $13.06 billion. In terms of its outlook for 2015, the company expects full-year earnings in the range of $16.30 to $17.30 per share.
Actavis shares have gained roughly 40% and 50% in the past six months and twelve months, respectively. The market was already betting on a strong earnings report Wednesday, and had baked that into the price. But looking ahead, it seems Actavis would have to work magic to reproduce 2014’s surge in 2015 — and that’s just too much to ask.
Investors have made a lot of money here. But it’s now time to take profits, especially after a 10% surge in the stock in only the past two weeks. At the very least, it’s not unlikely that we’ll see a 5% pullback to around $273, which is where the stock last made its flat base — an important benchmark and buy point target.