Credit Suisse analysts Monday initiated shares of Allergan at an "outperform" rating, saying the drugmaker's diversified drug pipeline is "underappreciated" by investors.
"We see it as a company with a broad and underappreciated pipeline that will help boost their already strong base business and that is trading at a compelling valuation and being led by a best-in-class management team," said analyst Vamil Divan in the report.
Last November, Allergan outlined its new "Open Science" research and development model, which is a three-part discovery, development and commercialization process for new drugs. The goal was to help build therapy area leadership and drive long-term growth, according to the company.
At that time, Allergan called out a pipeline that included more than 70 mid-to-late stage development programs. The company also said it planned to focus itself in the following areas: gastroenterology, mental health, women's health and urology, anti-infectives, medical aesthetics and dermatology, neuromodulators and eye care.
Divan said he is "bullish" about its recently launched products such as Vraylar, Viberzi and Kybella, and he expects strong growth for Allergan's existing products such as Botox, Linzess and its medical aesthetics business.
Divan also sees significant drug opportunities such as Abicipar and Rapastinel, though "it will take some time for these to play out."
Among the risks Allergan faces is its $40 billion-plus pending deal with Teva. The sale of Allergan's generics unit has taken longer than expected to close, but Divan expects it will.
Shares of Allergan ended the day down slightly at $247.85. Allergan's stock has plummeted this year, falling more than 20 percent. Credit Suisse set a target price to $327.
AGN 2016 Chart
DISCLOSURE: Credit Suisse does and seeks to do business with companies covered in its research reports.