In his second "Executive Decision" segment of "Mad Money" Tuesday from the West Coast, our own Jim Cramer sat down with Brent Saunders, chairman, president and CEO of Allergan plc (AGN) . While Allergan is best known for medical aesthetic products such as Botox, the company also has built what Saunders called the best migraine treatment portfolio of any pharmaceutical company.
Saunders said Allergan remains a great company, one with 7.7% growth in its core businesses and 12 programs currently in Phase III clinical trials. He added that the vast number of the company's recent acquisitions have been very good deals. Allergan is also a leader in eye care, including the treatment of glaucoma. That is a quick and dirty look at the fundamentals, so let's check out the charts.
In this daily bar chart of AGN, below, we quickly can see that the share price of AGN has not faired well in the last year. Prices did rally from May to early October but then quickly retraced those gains and more in the past three months. Trading volume was heavy in late October as prices spiked down and again in December as they broke the lows of March and May. Prices have rebounded from below $130 and have approached the underside of the declining 50-day moving average line.
The daily On-Balance-Volume (OBV) line is still in a downtrend from September, telling us that sellers of AGN have been more aggressive, though there is a decent uptick in the line from late December. The trend-following Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for a cover- shorts buy signal.
In this three-year weekly bar chart of AGN, below, we can see that the price of AGN has been in a longer downtrend than just since October. Prices are below the declining 40-week moving average line. The weekly OBV line is holding just above the lows of early 2018, which is just a slight improvement. The weekly MACD oscillator is below the zero line in bearish territory, but the two moving averages that make up this indicator are narrowing toward a possible weekly cover-shorts signal.
In this Point and Figure chart of AGN, below, we have no signs of accumulation or a base. A downside price target of $132.80 was reached and exceeded, but that is not enough to become bullish.
Bottom line strategy: A three-year decline will take more than a two-week bounce to reverse. AGN could retest its December low around $130 and perhaps start to show signs of more aggressive buying with a strongly rising OBV line. Be patient, but disciplined.