Yesterday morning, Medivation Inc (NASDAQ:MDVN) announced that it entered a definitive merger agreement with Pfizer Inc. (NYSE:PFE), totaling about $14 billion in enterprise value. Under this deal, Pfizer will acquire Medivation for $81.50 per share in cash, an acquisition expected to close in 2H16.
In reaction, Brean Capital analyst Jonathan Aschoff downgraded Medivation shares from Buy to Hold, and subsequently removed the price target, which Aschoff says aligns with his conclusion that “Pfizer’s offer makes sense and is unlikely to be bested by a competitor.”
Aschoff expects the combination with Pfizer will maintain the rise of prostate cancer-treating drug Xtandi sales as well as upcoming clinical and regulatory catalysts. The analyst adds, “We believe an October 2016 Xtandi label change for upstream use where Casodex is currently indicated will move Xtandi up in the prostate cancer treatment paradigm, and that Xtandi deserves to be marketed with a more established sales force from Pfizer. The acquisition of Medivation will complement Pfizer’s hormone-driven cancers and immune-oncology portfolio. We believe the merger is a wise move and that the $81.50 bid represents a full valuation of Medivation.”
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As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst John Aschoff is ranked #4,004 out of 4,122 analysts. Aschoff has a 37% success rate and faces a loss of 10.1% in his annual returns. However, when recommending MDVN, Aschoff gains 20.3% in average profits on the stock.
TipRanks analytics exhibit MDVN as a Hold. Based on 13 analysts polled in the last 3 months, 3 rate a Buy on MDVN, while 10 maintain a Hold. The consensus price target stands at $70,81, marking a nearly 12% downside from where the shares last closed.