Healthcare Business

Hot Political Rhetoric Hammers Specialty Pharmaceuticals: 3 to Buy Now

One tried and true tactic for politicians from both sides of the aisle is to go the populist route and blame society’s ills on mean, greedy, big business. While it rarely has a huge and lasting effect on the voters, it sure can on the companies in the sectors the politicians attack. In numerous reports from top Wall Street firms we cover, analysts point out that the specialty pharmaceuticals have witnessed their most precipitous decline in value since the financial crisis.

Adding to the carnage, you can toss in stocks that were over-owned, algorithmic fast money trading and end-of-the-quarter window dressing as many funds end their fiscal year at the end of the third quarter, and it equaled up to a big mess. Generally such irrational and provoked selling leads to opportunity. We scanned the Merrill Lynch stock coverage universe for specialty pharmaceutical stocks rated Buy and found three top companies that have been crushed.


This company has many of the top-selling drugs, but it has kept price increases reasonable compared to some of the egregious ones. Allergan Inc. (NYSE: AGN) is focused on developing, manufacturing and commercializing innovative branded pharmaceuticals, high-quality generic and over-the-counter (OTC) medicines, as well as biologic products, for patients around the world.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular and anti-infective therapeutic categories, and it operates the world’s third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry and a leading position in the submission of generic product applications globally.

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The company recently updated and upgraded earnings estimates for the balance of the year, and the response was very solid. This comes on the heels of Allergan’s gigantic $40.5 billion sale this summer of the firm’s generic business to Teva Pharmaceutical.

The Merrill Lynch price target is a gigantic $385, while the Thomson/First Call consensus price objective is lower at $375.29. Shares closed Wednesday at $268.99.