Allergan’s 1Q17 estimates
Allergan (AGN) is set to release its 1Q17 earnings on May 9, 2017. Analysts’ estimates show EPS (earnings per share) of $3.30 on revenues of $3.53 billion for 1Q17.
Allergan’s revenues are estimated to fall ~6.9% to $3.53 billion for 1Q17—compared to $3.80 billion for 1Q16. Analysts expect an operational increase in revenues for the US specialized therapeutics and international segments, which will be offset by the impact of the divestment of the global generics business and the negative impact of foreign exchange. The company divested its global generics business to Teva Pharmaceuticals (TEVA) in August 2016. The company also divested its ANDA distribution business to Teva Pharmaceuticals in October 2016.
Allergan has classified its business into three segments. US specialized therapeutics includes branded products—eye care, medical aesthetics, medical dermatology, and neuroscience and urology.
Analysts’ estimates show a gross profit margin of 86.6% for 1Q17—a 7.7% increase compared to the gross profit margin in 1Q16. Due to the increase in research and development expenses, and lower selling, general and administrative expenses as a percentage of total revenues, the EBITDA margin is expected to rise to 47.8% in 1Q17—compared to 47.3% in 1Q16. The net adjusted income is expected to fall to ~$1.19 billion in 1Q17.
To divest the risk, investors can consider ETFs like the iShares S&P Global Healthcare ETF (IXJ), which holds 2.3% of its total assets in Allergan. IXJ holds 7.7% of its total assets in Johnson & Johnson (JNJ), 4.4% in Merck and Co. (MRK), and 2.1% in Bristol-Myers Squibb (BMY).