Analysts are weighing in on the pharmaceutical giant Pfizer Inc. (NYSE:PFE) and specialty-drug giant Allergan PLC (NYSE:AGN), as the companies announce a merger that will create the world’s largest pharmaceutical giant. Shares in both companies declined following the deal’s confirmation.

Pfizer Inc.

Evercore ISI analyst Mark Schoenebaum came out with his views on the merger deal, noting, “PFE buying AGN for 11.3 shares of PFE stock. Based on Fridays close of 32.18 the stock component of the deal would be would be worth $363.64. We should expect a gross trading spread of 20% +\-based on deals with similar attributes such as political risk, size of the deal, mix of consideration, expected duration to close the deal, PFE dividends. There is a potential it could be tighter initially with AGN investors feeling better about the inversion risk and the $2 billion in synergies mentioned in the press release. Given the heavy stock component, for every dollar PFE goes up or down is worth roughly ~ $ 11 move for AGN.”

The analyst concluded, “I would expect major volatility in both PFE and AGN in the initial few days as the stocks find equilibrium in the market and establish a spread. PFE is now down 10% since confirming the two are in talks in late October. Overall, I would expect that trend to continue as long only’s sell and arbs begin to establish positions. I can see PFE trend to $30 or lower.”

Schoenebaum rates Pfizer shares a Buy, with a price target of $38, which represents a potential upside of 21% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Schoenebaum has a total average return of 17.1% and a 70% success rate. Schoenebaum has a 4.9% average return when recommending PFE, and is ranked #1025 out of 3858 analysts.

Out of the 11 analysts polled by TipRanks, 8 rate Pfizer Inc stock a Buy, 2 rate the stock a Hold and 1 recommends a Sell. With a return potential of 34%, the stock’s consensus target price stands at $42.25.

Allergan PLC

Mizuho Securities analyst Irina Rivkind Koffler joined the crowd, reiterating a Buy rating on Allergan shares, with a price target of $340, which represents a potential upside of 11% from where the stock is currently trading.

Koffler noted, “While we cannot predict future U.S. government actions that could make this inversion less attractive for Pfizer, at this time we don’t expect any competing bids for Allergan given the size of the deal. Our Allergan model currently contemplates the business following its generics sale and our DCF valuation and standalone $247 valuation is predicated upon Allergan debt pay-down with the proceeds.”

“Overall this is a positive for the space, in our view. We think that this deal could spur a series of smaller product, pipeline and segment divestitures from both Allergan and Pfizer that could benefit downstream companies in search of accretive products or late stage assets,” the analyst continued.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a total average return of 43.9% and a 69.2% success rate. Koffler has a 9.6% average return when recommending AGN, and is ranked #3 out of 3858 analysts.

Out of the 17 analysts polled by TipRanks, 14 rate Allergan stock a Buy, while 3 rate the stock a Hold. With a return potential of 18%, the stock’s consensus target price stands at $359.69.