Allergan (NYSE: AGN)
Allergan has seen quite a bit of movement recently, and for good reason. I know , I just wrote about the company two days ago, and I normally don’t follow up so soon, but I didn’t want you to miss this opportunity. Recently, Allergan received news from the United States Treasury Department as well as the IRS that put a damper on the company’s plans to be acquired by Pfizer. While this was perceived as bad news, it is opening the door to big gains for investors. Today, we’ll talk about the news from the Treasury and IRS, how it is opening the door to opportunity, and what we can expect to see from AGN moving forward. So, let’s get right to it…
US Treasury And IRS Throw A Wrench In Allergan’s Plans
Recently, it was announced that Pfizer would be acquiring Allergan in a deal worth around $160 billion. That is a massive amount of money. However, it doesn’t look like the deal is going to go through anymore. The reality is that Pfizer is not here in the United States, and the US is looking for ways to keep businesses on its land to enjoy the taxes associated with them. As a result, they announced earlier this week that the US Treasury Department and IRS has initiated temporary restrictions and proposed changes to corporate tax inversion policies. This was horrible for the AGN deal because if it went through, it would be the largest corporate tax inversion deal in history! Now, because of the new rules that are being imposed, for the deal to go through, Pfizer would have to pay massive amounts of money more than they agreed to, and that doesn’t look like it’s going to happen.
Why This Opened The Door To Opportunity For Investors
As we know, nothing seems to move the needle in the market more than the concept of mergers and acquisitions, and when the deal was announced, AGN climbed in a big way. However, after the announcement by the US Treasury and IRS, AGN fell in a big way. In fact, the stock shed more than 20% in a single trading session. This is where the opportunity comes.
As investors, our ultimate goal is to buy low and sell high. Ultimately, the declines we saw on AGN following the news from the US Treasury Department and the IRS have created the opportunity to buy low. The truth is that AGN is an incredible company. It’s got incredible products, a long list in its pipeline, and a plan for growth that is unlike anything else in the biotechnology industry. As such, they are worth well more than what they’re trading for at the moment. As such, buying now would likely yield incredible long term gains.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish expectation of what we can expect to see from AGN. The reality is that the declines we’ve seen on the stock have brought the value of the stock down to an incredibly appealing rate. When it comes down to it, price movement in the market tends to happen through a series of overreactions. With that said, recent declines were warranted to an extent. However, the sheer size of the decline had no fundamental backing. All in all, AGN is worth far more than it is trading for at the moment. So, there’s no reason to expect anything less than gains moving forward.
What Do You Think?
Where do you think AGN is headed and why? Let us know your opinion in the comments below!