Allergan Lifts Q3, 2014 Earnings Outlook

(RTTNews) - Multi-specialty health care company Allergan Inc. (AGN), which is trying to fend off a hostile takeover bid from Canada-based Valeant Pharmaceuticals Inc. (VRX, VRX.TO), on Thursday raised its adjusted earnings outlook for the third quarter and fiscal 2014. In addition, the Botox maker raised its earnings outlook for fiscal years 2015 and 2016.

Allergan said it has benefited from robust growth of worldwide markets in which it operates, growth in market share in most categories, regulatory approvals for new products in the U.S. and internationally, and targeted investments to create and grow new products and categories.

Allergan also said it recorded "exceptional growth" in earnings per share from the acceleration in sales as well as leveraging of sales and marketing expenditures. Further, the company expects benefits from its previously announced restructuring program to be reflected in its actual results beginning in the fourth quarter of 2014 and continuing through 2015.

David Pyott, Chairman of the Board and Chief Executive Officer of Allergan said, "Today's announced expectations for the third quarter and updated future outlook further demonstrate that there is a vast value gap between Valeant's offer and the intrinsic value of Allergan."

For the third quarter, Allergan now forecasts adjusted earnings in a range of $1.76 to $1.78 per share, up from the prior range of $1.44 to $1.47 per share.

The Irvine, California-based company now expects product net sales for the third quarter to increase in excess of 17 percent in dollars compared to the year-ago period, demonstrating a further acceleration in percentage sales growth.

In July, Allergan forecast total product net sales for the third quarter between $1.675 billion and $1.750 billion, excluding any future anticipated revenue from the transition services agreements related to the sale of the obesity intervention business.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $1.48 per share for the quarter on revenues of $1.74 billion. Analysts' estimates typically exclude special items.

Allergan said it will make its regular disclosures on sales and operating results during its third-quarter earnings call. The company has not yet determined the date of the earnings call.

For fiscal 2014, Allergan now expects adjusted earnings per share between $6.20 and $6.25, representing an increase of 30 to 31 percent compared to the previous year.

The company currently expects product net sales for fiscal 2014 to increase between 14 and 15 percent in dollars compared to the prior year. This reflects the continued negative impact of the strengthening dollar in the fourth quarter of 2014.

In July, Allergan forecast adjusted earnings per share for fiscal 2014 between $5.74 and $5.80, and total product net sales between $6.90 billion and $7.05 billion, excluding any future anticipated revenue from the transition services agreements related to the sale of the obesity intervention business.

Street expects the company to earn $5.81 per share for the year on revenues of $7.09 billion.

Further ahead, Allergan forecasts fiscal 2015 adjusted earnings to be about $8.60 per share, up from the prior forecast range of $8.20 to $8.40 per share. Analysts project annual earnings per share of $8.25.

For fiscal 2016, Allergan forecasts adjusted earnings to be about $10.25 per share, compared to its prior forecast for earnings of about $10.00 per share.

In mid-July, Allergan reported a 16 percent increase in profit for the second quarter from the prior year on double-digit revenue growth, including higher sales of its anti-wrinkle treatment Botox.

At that time, Allergan said that as part of a restructuring, it will cut its workforce by about 1,500 employees or about 13 percent of its current global headcount, and eliminate an additional approximately 250 vacant positions.

Valeant Pharma along with billionaire investor William Ackman's hedge fund Pershing Square Capital Management, L.P. made a hostile bid in April to acquire Allergan for $46 billion in cash and stock, but that offer was rejected by Allergan. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

In May, Valeant Pharma sweetened its bid for Allergan to about $53 billion, but that offer was again spurned. Allergan has called Valeant Pharma's business model unsustainable and said that a deal with Valeant Pharma would hurt its research and development program.

AGN closed Wednesday's trading at $190.50. In Thursday's pre-market activity, the stock is up $8.24 or 4.43 percent to $194.44.