Is Allergan’s Appeal Only Skin Deep?

A recession almost always means pinching pennies, tightening the belt and cutting back on frivolous expenses as a way to save money. So you’d think that Botox, breast implants and stomach bands would be the first things to go when the market tanks. But Allergan’s fourth-quarter report told a different story, with the company beating Wall Street expectations by 3 cents a share. So it’s obvious the desire for wrinkle-free skin, and other totally narcissistic physical enhancements, hasn’t left us yet.

But Allergan is much more than just cosmetics, which account for only 30% of sales. Medical products are what drive this company’s business. In 2008, the eye-care pharmaceuticals division alone, with its treatments for glaucoma, inflammation and dry-eyes, pulled in 46% of total revenues. And CEO David Pyott told Cramer on Wednesday that Allergan has six other products under review with the Food and Drug Administration. With that kind of diversity, it doesn’t look like a downturn would cripple this company.

Cramer spoke at length with Pyott, discussing new product releases, competition with Johnson & Johnson and Medicis Pharma, even $50 Botox coupons. Allergan, which looks like “Pfizer with growth,” tells a “complicated story,” the Mad Money host said. He likes the exposure to usually recession-proof health care, but the economy could still drag heavily on business.

So what did Cramer decide? Is AGN a buy? Watch the video to find out.

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