Merrill Lynch Names Allergan a Top Pick

Merrill Lynch & Co. added the stock of Irvine eye- and skin-care company Allergan Inc. to its Focus One list of top industry stock picks.

Merrill analyst Gregory Gilbert wrote in a research note that the company “should be a core holding for health-care and mid-cap growth investors.”

Gilbert anticipates accelerated earnings growth throughout the year, which could bring about 20% growth this year, and an even more intensified acceleration rate of 25% or better next year.

He forecasts earnings of $1.92 a share this year and $2.30 a share next year. He commended management’s pipeline strategy of supplementing internal development with external collaborations and acquisition.

“Because of the scarcity value of a story like Allergan, the stock typically trades at a premium to specialty peers. The stock’s valuation has become more reasonable recently,” Gilbert said. The price has fallen about 30% year-to-date.

Gilbert has a price target of $90. The stock gained $1.24 Wednesday to close at $72.30 a share on the New York Stock Exchange.