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Allergan’s Looking Real Pretty Right Now

Allergan was among a select group of stocks to close in positive territory on Thursday, despite the Dow losing 268 points. Cramer invited the company boss David Pyott onto Mad Money to find out what he was doing right.

Remember, Allergan is the maker of some of late-stage capitalism’s greatest technological advances: Botox, breast implants, weight-loss devices and dermal fillers for smooth skin. Cramer has often recommended the stock as a play on consumer vanity, which is as good a driver for business as any other economic factor.

But right now it’s Allergan’s eye-care business that has piqued Cramer’s interest. This division represented 47% of 2009 sales, and he thinks it is grossly undervalued. At least if you consider two other key eye-care deals priced this year: Novartis buying 52% of Alcon fromNestleand Abbott Labsbuying Advanced Medical Optics. If you use Abbott’s purchase as a model, the cheaper of the two, then Allergan’s eye-care business should be worth $9.3 billion. Subtract that number the total market cap, and Wall Street is paying just $7.7 billion for the rest of Allergan, which is the majority of the company.

“That's way too cheap,” Cramer said.

But don’t just take his word for it. Watch the video for Cramer’s full interview with CEO David Pyott.

Cramer’s charitable trust owns Abbott Labs.

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