Allergan Inc. (AGN - Analyst Report), which is currently being pursued by Valeant Pharmaceuticals (VRX - Analyst Report), raised its third quarter 2014 and full year 2014 earnings guidance based on strong revenue growth, an increase in market share coupled with several regulatory approvals, which should further boost revenues. Apart from these, restructuring initiatives will also benefit Allergan’s results in the fourth quarter of 2014 and 2015 (read more: Allergan, a Valeant Takeover Target, Plans 1,500 Job Cuts).

Allergan now expects third quarter earnings in the range of $1.76 to $1.78 per share, up from its previous guidance of $1.44 to $1.47 per share. The Zacks Consensus Estimate currently stands at $1.44 per share.

Meanwhile, the company expects acceleration in sales growth. Allergan expects product net sales for the third quarter of 2014 to increase more than 17% as compared to the year-ago quarter.

The company also raised its 2014 earnings guidance. Allergan now expects 2014 earnings of $6.20–$6.25 per share as compared to the prior guidance of $5.74–$5.80 per share. The Zacks Consensus Estimate of $6.22 per share is within the guided range. Allergan expects product net sales for 2014 to increase 14% to 15% as compared to the previous year.

Allergan estimates earnings per share to be approximately $8.60 (previous guidance: $8.20–$8.40) and approximately $10.25 (previous guidance: $10.00) in 2015 and 2016, respectively. Currently, the Zacks Consensus Estimate for 2015 is in line with the company’s guidance.

Takeover Status

Currently, rumors are rife about Allergan looking to acquire Salix Pharmaceuticals Ltd. (SLXP - Analyst Report) in order to deter Valeant’s hostile takeover plans, as Allergan combined with Salix would become a much bigger company (read more: Allergan and Salix Pharmaceuticals Up on Takeover Rumors).

We note that Allergan had rejected Valeant’s revised acquisition offer. However, rumors are circulating about Valeant planning to come back with a raised offer. Another company rumored to be interested in Allergan in Actavis (ACT - Analyst Report). Investor focus is expected to remain on updates relating to the possible Allergan – Salix, Actavis – Allergan or Valeant – Allergan transactions.

Allergan currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Actavis carrying a Zacks Rank #2 (Buy) stock.