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We expect Allergan plc AGN to beat expectations when it reports fourth-quarter and full-year 2018 results on Jan 29, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 5.99%.

Allergan’s share price has declined 13.8% in the past year compared with the industry’s decline of 21.8%.

Allergan’s earnings performance has been strong, with the company beating expectations in each of the past four quarters. The average positive earnings surprise over the last four quarters is 6.66%.

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Let’s see how things are shaping up for this announcement.

Factors to Consider

We believe that Allergan’s key products like Botox, Juvéderm collection of fillers, Vraylar, Alloderm, Linzess and Lo Loestrin are likely to support sales growth in the quarter. The Zacks Consensus Estimate for Botox is $937 million.

On the third-quarter call, the company had said that Botox demand was strong despite the launch of Amgen’s CGRP antibody, Aimovig. However, the company did mention that it expects the growth rate for Botox Therapeutic to moderate due to competition from CGRPs. Other than Aimovig, Teva’s and Lilly’s CGRPs were also approved in September.

Botox’s sales growth rate is expected to be in mid- to high-single digits. At the same time, the company said that that the introduction of the CGRPs should expand the migraine market and that Botox and the CGRPs can coexist in the larger market. An update is expected on the fourth-quarter conference call.

However, revenues in the fourth quarter are expected to be hurt by recall of Ozurdex in international markets in October, currency translation and lost revenues due to the sale of medical dermatology assets in September 2018.

Meanwhile, lower sales of Namenda XR and Estrace cream due to generic competition are expected to continue to hurt Allergan’s revenues in the fourth quarter.

While a generic version of Alzheimer’s treatment Namenda XR was launched by India based company, Lupin in February 2018 that of Estrace cream was launched by Mylan MYL in January 2018. A generic version of Delzicol is also expected to be launched soon.

However, no generic version of Restasis, Allergan’s second best-selling drug, has been launched yet. On the third-quarter conference call, management had said that a generic version of Restasis is now expected to be launched between Nov 1, 2018 and Jan 1, 2019. The delay in launch of Restasis generics may add to the top line in the fourth quarter.