Allergan, Inc. (AGN): No Sign of a Slowdown at This Recession Resistant Company

Ophthalmology Looking Good Too

Referencing the table above, it’s clear that AGN gave good numbers in ophthalmology. Indeed, I noted that Johnson & Johnson also gave good numbers in eye care. Its segment sales growth was 6.4% in the last quarter, which strikes me as an acceleration from the kind of 5% growth that the industry was achieving at the start of the year.

Eye-care is relatively recession resistant. A specialist company like The Cooper Companies, Inc. (NYSE:COO) argues that a typical growth rate for the industry in a recession is 3-5% moving up to 5-7% when the economy recovers.  The good news is that COO, JNJ and AGN  (8.2% in local currencies for Q4) are all reporting numbers in excess of the ‘recession’ figures, so does this imply the economy is recovering or that eye-care is experiencing a ramp up in growth thanks to demographic issues? I suspect the latter.

However, it isn’t all plain sailing. Lumigan (eye pressure) patents will expire in August 2014 and Novartis AG (ADR) (NYSE:NVS) is believed to be planning to release a generic by the end of 2014. Novartis needs to do something because of all the companies mentioned, its eye-care division (Alcon) seems to have the slowest growth. Bausch & Lomb is probably available for purchase, but I doubt Novartis is interested.

Where Next for Allergan?

I like the company, I like its execution, I like the quality of its long term growth prospects. However, I cant see a reason to chase the evaluation higher here. When I last looked at the stock it was closer to $90 and I mentioned that it had the potential to ‘do its earnings.’ Well it did that and some more, so at $104 it is probably fairly priced. I’m afraid it’s another one for the increasingly lengthening watch list.

The article No Sign of a Slowdown at This Recession Resistant Company originally appeared on Fool.com and is written by Lee Samaha.

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