Michael Waterhouse (Morningstar, AGN)
Apr 19, 2017|
Michael Waterhouse (Morningstar, AGN) by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Michael Waterhouse for Morningstar joins us for some stock talk today and Michael thank you for joining us. Like we're talking about Allergan here's the ticker on the company's EG and can you talk a little bit about the company and what your views on an hour. Yes sir so for the Euro was sensitive MI and obviously with the name this is a specialty pharmaceutical company market cap is about 79 billion. And we value barker right harassment the company is about 300 dollars at current price of about 20% discount and this is. Why in my own name and with our methodology so we expect of a lot of culture and economy that. That future earnings power for the. Was the stock trading at such discount to your fair value right now. You the question I mean the the stock actually through much of last year or even had a bigger discount this stock had a pretty nice run starting in about December and that and through January. Even bill you know we've stated that a good bill undervalued I think there's a few things going on there I mean I think always the one that that most people are aware of just. With the election cycle presidential election cycle on that and obviously Donald Trump up there with is this tweet there's been a lot of focus on. Drug pricing. And that has kind of taken a lot of windows sales of out of apartment space and overall we have a lot of names. Here that we cover that that you look undervalued and our team would be in that book is well. I think there's some other things going on merits here immunology and as a business that has had a pretty rapid transformation over the last year's U you know this company recently made a lot of news because spies are potentially. Was trying to by the company in them that deal fell through just some some treasury issues and then. This company also recently sold a very large generics unit to come up for forty billion the company I think a lot of investors so they're kind of uncertain of exactly where this company's been and where it's gone but I think overall we eat we really do you like the business and you have. I think most of your listeners quite humorous going with the largest public vote talks. Which is about 20% of their business it's a very good and ties and has. A long long window of a group of. Michael looking at this company what what other products in particular attract you. To the company in the future or even any type of development there working on. Yeah I mean that would it's it's a good point I would say that there's really humane reasons we like the business and want is we obviously you like the product portfolio and diverse group. Applied across a number of their security is with. Long happy wife of a lot of those products. And compete and attractive categories like off the multi Castro. Both the Hispanic business is truly kind of the council here as I mentioned that would be led by boat talks. But they also have breast implants an official pillars. And this is only catch a business that Hispanic business as a elective procedures so a lot of that millions of essentially immune from a lot of the reimbursement rest but a lot of pharma companies are facing and the other thing too is the pipeline management has been investing heavily in new car. Products that there are pushing through clinical trials. As the number of near term opportunities. For. Conditions that don't really currently have treatment and the nearest one they have this that you earn our board drug which potentially could be launched next year. And then they haven't a lot of longer term products by one. The bigger potential opportunities is a drug court match which is essentially fatty liver disease that currently. Good doesn't have a treatment. At all either. Looking at a company like this how much volatility can investors see based on. That development pipeline and know that I forget who was at it was Eli Lilly earlier this week their shares took a pretty decent sized hit. With some news that a drug they'd expected. To see approved was actually not going to be able to go through the process how much risk is there and accompany this. Yeah it's there. I mean it's definitely you know any investor and in the pharmaceutical business you're gonna expose yourself to that type of the issue and Allergan which would definitely be in that category as well I think one reason were a little more comfortable Allergan is a that the the product. Hopefully as pretty highly diversified as I mentioned vote caucuses. About 20% of revenues the next largest product list basis that it tries drug about 10% of revenue so they don't miss only have so. Some of the large part concentration on somebody's Biotech firms do for example where. Either one oncology drug earth or for example something like it Iliad for example there has the franchise I can be quite large overall business. The second thing too is the pipeline is is equally fairly well diversified because this company is not really going after these very very large on. Ecology indications for example that a lot of big pharma marked by a record going after so in the sense here on untrue there's going to be some failures and there's going to be some successes that pipeline but there's probably all. All laws bare. You know that that. Essentially all direct arm one basket you know took to a certain extent. Very good rule Michael thank you very much for joining us today are part. Michael Waterhouse from Morningstar talking about Allergan the ticker on his AG and.