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The 2014 All-America Research Team: Pharmaceuticals/Specialty, No. 1: Aaron (Ronny) Gal

< The 2014 All-America Research TeamAaron
(Ronny) GalSanford C.
Bernstein & Co.First-Place Appearances: 6

Total Appearances: 8

Analyst Debut: 2007

For a sixth consecutive year, Sanford C. Bernstein & Co.’s Aaron (Ronny) Gal, 47, claims first place on this roster, and investors readily explain his longevity. “Ronny continues to produce differentiated, impactful research,” one portfolio manager reports. “Both in his notes and dialogue, he shares thoughtful views, greatly assisting in the investment mosaic.” U.S. specialty pharmaceuticals names have performed well this year, and Gal believes they will continue to do so in 2015. He is especially bullish on the prospects for long-standing favorite Allergan, whose blockbuster products include neurotoxin Botox and eyelash enhancer Latisse. Gal credits the Irvine, California–headquartered company’s “high revenue growth of about 10 percent and discounted valuation of 16 times 2016 earnings per share.” The stock rocketed 90.2 percent over the 12 months through mid-September, to $168.56, bolstered in April when Canadian rival Valeant Pharmaceuticals International and private equity powerhouse New York–based hedge fund Pershing Square Capital Management jointly proposed to acquire Allergan. Gal anticipates potential further upside, “if they are willing to pay an appropriate premium,” he says. His target price for Allergan’s stock is $200. A special meeting of the company’s shareholders will convene in December to consider the arrangement. The researcher also looks favorably on integrated specialty pharma provider Actavis, which moved its headquarters from Parsippany, New Jersey, to Ireland last October, on completion of its acquisition of women’s health specialist Warner Chilcott. Actavis, says Gal, boasts a “high profit margin of 31 percent, cash generation capability and impressive track record of growth by acquisitions.” His target price for the New York–traded shares is $250, which represents a 6.5 percent premium to their mid-September value.


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