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Drugmaker Allergan ( AGN ) got a price-target cut from Canaccord Genuity Thursday after the company hit a delay in its merger with Pfizer ( PFE ), among other issues. Analyst Corey Davis noted that on Wednesday, the Federal Trade Commission (FTC) had asked for additional information on the Pfizer-Allergan merger , which was first announced in November. The companies also have to wait until Allergan finishes divesting its generic-drug business to Teva Pharmaceutical Industries ( TEVA ), which itself hit a delay this month that caused Teva to push the expected closing date from Q1 to June. Pfizer and Allergan still expect to close their $160 billion merger in the second half of this year. “In the meanwhile, we are lowering our Q1 estimates (EPS drops from $3.43 to $2.89) as it’s always the weakest quarter for specialty pharma, and we feel the rest of the Street is also too high,” Davis wrote in his research note lowering his price target on Allergan stock to 320 from 340. “This has been a trend in the past several years and is partly because of the reset of Medicare Part D.” Davis added that the merger of Target ( TGT ) and CVS Health ( CVS ) should hit Allergan’s distribution business to the tune of $500 million a year, and the launch of bowel-disease drug Viberzi has increased spending. Davis wrote that he is nonetheless maintaining his buy rating due to the high likelihood that the deal will close. There has been some skepticism among investors over whether the Pfizer-Allergan deal is going to close this year — besides the signals from Allergan’s falling stock price, a buy-side survey by Evercore ISI analyst Mark Schoenebaum this month found that a fifth of respondents place the odds at less than 50%. Along with the FTC’s backlog, there’s concern that the incoming president and Congress might do something to limit tax-inversion deals like this one, as some candidates have threatened to do. Pfizer’s leadership and Wall Street analysts have been more confident, however. On March 8, Deutsche Bank analyst Gregg Gilbert wrote that the gap between Pfizer’s offer price and Allergan’s stock price — then $47 — presents a buying opportunity as it will likely narrow as the deal closing nears. Allergan stock was down a fraction in morning trading on the stock market today , near 274. Scalper1 News
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