Akorn may sell for $34, but ‘double-digit downside if doesn’t happen’
Since the announcement, shares of the latter have spiked more than 30 percent, currently trading close to $32.75.
In a report issued Monday, Leerink analysts Jason M. Gerberry and Etzer Darout weighed in on the issue, arguing that Akorn complements Fresenius and that a competitive bidding for the former seems unlikely. The experts set an estimated takeout valuation of $32–$34 per share, based on comparable deal multiples.
This target implies very little to zero upside potential from current stock prices; on the other hand, if the deal does not materialize, the downside potential comes in double digits – as Leerink values the company at roughly $22 or $23 per share.
According to the research report, Gerberry and Darout believe Akorn would provide Fresenius with “an expanded injectable business and a top US generic ophthalmic business while adding a few other specialty dosage forms.”
From the acquirer’s perspective, the purchase would add a few cost synergies, estimated at around $100 million.
Having said this, they noted that both companies pay very elevated tax rates of approximately 31 percent, so, “it’s unclear if financial synergies are a driving force behind the potential acquisition.”
Latest Ratings for AKRX
|Mar 2017||Deutsche Bank||Downgrades||Buy||Hold|
|Dec 2016||Goldman Sachs||Initiates Coverage On||Sell|
|Nov 2016||Bank of America||Downgrades||Buy||Underperform|