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Botox Tax

Friday, 31 Jul 2009 | 5:43 PM ET

Botox has been lifting brows in Hollywood for quite some time, but lately it’s been raising quite a few eyebrows in DC, as well!

With lawmakers tightening their purse strings, word has surfaced that President Obama may consider taxing Botox treatments as a way to fund healthcare reform.

The move could bring in a pretty penny. According to the latest earnings from Botox maker Allergan, sales of the drug brought in $337 million in the last quarter.

AGN CEO Speaks
Allergan beat Wall Street expectations, with David Pyott, Allergan CEO and the Fast Money traders.

And it’s not just Botox. All kinds of plastic surgery ranging from facelifts, to tummy tucks and even hair transplants would be subject to tax.

Now before you get your knickers in a knot, it's hardly a done deal. In fact, the speculation largely stems from a post on the Drudge report. “This initiative is already losing momentum," Allergan CEO David Pyott tells Fast Money. And according to Senator Max Baucus, it’s not under serious consideration.

What should be under serious consideration, however, is whether this stock belongs in your portfolio. The firm beat Street expectations when they reported earnings this week. And for the year, Allergan projected 2009 sales of $4.2 billion to $4.3 billion.

"We cannot remember a time when Allergan beat by this much, so we assume it was intended to send a strong message to the Street that it has plenty of flexibility in its discretionary spending," Natixis Bleichroeder analyst Corey Davis said in a research note.

Want to find our more about Allergan? Check out our interview with CEO David Pyott. Watch the video, now!


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Trader disclosure: On July 31st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (AMZN), (MSFT), (MCD); Terranova Is Short (TM)

For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
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Virtus Investment Partners Owns More Than 1% Of (ABD)
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Virtus Investment Partners Owns More Than 1% Of (CAL)
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Virtus Investment Partners Owns More Than 1% Of (IGE)
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Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
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Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co
Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights
Virtus Investment Partners Owns More Than 1% Of (SKT)
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Halftime Report

  • Jay Yarow, The Business Insider, and Steve Milunovich, UBS, discuss whether Tim Cook is to blame for Apple's drop in growth. I think it's pretty clear they missed the big phone market and overestimated the success of the plastic 5C phone, says Milunovich.

  • CNBC's Eamon Javers reports on Bill Ackman's stake in Allergan. Javers says this is a classic case of insider trading that is not against the rules.

  • FMHR trader Josh Brown thinks Dunkin' Brands looks fantastic technically, while Mike Murphy says investors are questioning the company's massive expansion plans.