Shocking The Street: Ratings Downgrade Could Wreck Allergan

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The stock market keeps going up and up, regardless of how poor the economy is. Buoyed by former President Barack Obama, Janet Yellen, Ben Bernanke, Mario Draghi and current president Donald Trump, the markets defy all common sense. Too made politicians cannot spur wage growth. One of the biggest beneficiaries of this “faux wealth effect” has been Allergan PLC. When it’s not changing its domicile to Ireland for a lower tax rate, it’s buying up pharmaceutical companies, raising prices and cutting R&D. The markets have warranted this “illusion of growth” with a 15x EBITDA multiple.

The company has a legion of analysts who act more like PR mavens, touting the stock and what a great businessman Brent Saunders is. However that could soon be coming to an end.  Shocking The Street also believe a ratings downgrade for Allergan (AGN) could be imminent:

Allergan (AGN) has dominated the news cycle over the past month. It is currently locked in a patent battle with Mylan (MYL), Teva (TEVA) and Pfizer (PFE) over its top-selling drug Restasis. The exclusivity on Restasis ended in Q2 2014, but the company got the patents extended for another 10 years. When generic rivals attempted to offer a generic version Allergan sued them in federal court last month. To avoid an inter partes review (“IPR”) at the U.S. Patent and Trademark Office, the company sold the patents to the St. Regis Mohawk Tribe. As a sovereign entity St. Regis can apparently dismiss and IPR.

Shocking The Street believes Allergan’s operations are weaker than the market suspects. Its debt could get downgraded by Moody’s or S&P. To read more

About Shocking The Street

Shocking The Street bring you a team of analysts sifting through public financial statements and finding mis-priced stocks the PR mavens won’t tell you about. They do the difficult work of parsing cash flow statements and balance sheets, so yo won’t have to. While analysts have huge platforms and are buoyed by trillions of money printed by the government keep stocks levitated, Shocking The Street presents the facts. They are proof that old-fashioned fundamental analysis is not dead.

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