Shares of Relypsa Inc (NASDAQ:RLYP) jumped 59% to $32 in pre-market trading, after the company announced that it is going to be acquired by Galenica for $32/share, a 59% premium. In reaction, analyst Mara Goldstein from Cantor maintained her Buy rating on RLYP, with a price target of $41.
The analyst expected Relypsa to be acquired at some point due to the potential of its drug Veltassa. Goldstein believes that it can grow Veltassa into a significant commercial brand, although this may take some time because “the cost to develop the market is high.”
Additionally, Relypsa’s main competitor product ZS-9 is experiencing delays, which means Veltassa will be the “only voice in the market.” While less competition tends to be a positive, the analyst doesn’t believe this is the case, as more products would grow the market. The analyst then states “while [I] think that a higher valuation could accrue with time, [I] think that the volatility of the shares over the past year and the still substantive premium can drive the deal to completion.”
According to TipRanks, the analyst has a yearly average loss of 7.9% and a 41% success rate. The analyst has a 6.5% average return when recommending Relypsa, and is ranked #3,875 out of 4,073 analysts.
TipRanks shows that out of the 12 analysts who rated Relypsa in the last 3 months, 83% gave a Buy rating and 8.5% gave a Hold rating and 8.5% gave a Sell rating. The average 12-month price target for the stock is $30.45, marking a 51.49% upside from current levels.