Allergan (NYSE: ACT) (NYSE: AGN)
Allergan had a relatively strong day in the market today. That is, until after hours. Unfortunately, the stock is tanking and in a big way at the moment. The declines are happening for a good reason. It was announced today that AGN is receiving pressure for the US Treasury and the IRS. Today, we’ll talk about the details associated with the pressure put on the company, how the market is reacting to the news, and what we can expect to see from AGN moving forward. So, let’s get right to it…
Allergan Receives Bad News From The Wrong Parties
As mentioned above, AGN received some pretty bad news from the U.S. Treasury and the IRS. According to a news release that was published by The Street, the U.S. Treasury and the IRS have issued a temporary regulation to further reduce the benefits the company receives and limit the number of corporate tax inversions the company can take advantage of. Perhaps more importantly, these agencies informed the company that they have proposed regulations to make these temporary changes permanent.
This was an incredible blow to Allergan. Unfortunately, Allergan is a company that has its accounting down. Not only does the company take advantage of several benefits offered by the United States government, but they know their loopholes to avoid massive amounts of corporate taxes. All in all, if the proposed regulations go through, AGN will have a huge amount of money added to its expenses column, and unfortunately, that’s what’s likely to happen.
How The Market Reacted To The News
One of the first things that investors notice when they get started in the market is that the news moves the market. In general, when there is good news released about a publicly traded company, we can expect to see positive movement in the value of the stock. Adversely, when there is bad news released, we can expect to see declines in the value of the stock. The movement also depends on the severity of the news. News with high levels of severity will lead to big movements in the market. As you could imagine, the information that investors received with regard to AGN today was overwhelmingly bad. As a result, we’re seeing overwhelmingly negative movement in the value of the stock today. Currently (7:38), AGN is trading at $217.00 per share after a loss of $60.81 per share or 21.89% thus far in after hours trading today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from AGN. First and foremost, the short term outlook isn’t looking very good at all. At the moment, investors are overwhelmingly concerned with the new costs that are likely coming for the company, and rightfully so. As a result, we’re probably going to see more declines on the value of the stock today. However, in the long run, my outlook is a bit different. Will it take some time for AGN to make up the large losses we’re seeing in the market today? Absolutely! Will this be a nail in the coffin for the company? Not at all! The truth is that Allergan has an incredible list of products and a long line of prospects that will likely generate strong revenue. The company has a great team and incredible management. All in all, I think the stock will be just fine in the long run.
What Do You Think?
Where do you think AGN is headed moving forward? Let us know your opinion in the comments below.