AbbVie Inc. [NYSE: ABBV] to Buy Allergan [NYSE: AGN] for $63 Billion in the Latest Biopharma Deal: High-value mega deals continue to dominate the Biopharma industry, and multibillion-dollar mergers, and buyouts have become the norm lately. According to Prudential Financial Chief Markets Strategist Quincy Krosby, these deals are likely to get more frequent as pharmaceutical companies move to consolidate before a potential change in control in Washington as the election year approaches. The deals are also being motivated by the need to produce drugs more cost-effectively.
The latest of these deals is the announcement by AbbVie Inc to buy out Botox maker Allergen in a cash and stock deal. The announcement was a huge boost for Allergan stock on Tuesday. Allergan stock was a big winner and closed the day up by 25%. However, things weren’t so good for ABBV. The stock closed the day at in the red, losing 16%. This is likely because, the market is still trying to figure out whether this is a value buy. Allergen has been struggling for some time now, and doesn’t send the image of a growth company. However, if pre-market price action is anything to go by, ABBV could be headed for a rebound in the day. At the time of writing, the stock is up and trading around $66.79.
From a look at the charts, Allergen is in a bullish breakout. The stock shot up to a high of $167 before entering a consolidation phase between $162.47 and $164.27 for the better part of the day. If it opens the day above yesterday’s high of $167, it would be an indicator of bullish sentiment, and a possible green day on Wednesday. On its part, AbbVie did an exact opposite price move on Tuesday. It had a bearish breakout to close the day at $65.70. If its pre-market price action pushes it above $70.67, which was its trading highest trading price on Tuesday’s, it would be confirmation of bullish momentum in the day.
There is a lot of positive sentiment around pharmaceutical stocks at this point due, to the ongoing consolidations in the industry. This could also play a role in adding to the bullish sentiment around ABBV and Allergan. They are the pharma stocks in the spotlight at the moment.