Today’s biggest news is coming from Pfizer Inc. (NYSE:PFE), which announced its offer to acquire Medivation Inc (NASDAQ:MDVN) in a stock deal worth as much as $14 billion. Below, analysts discuss the aspects of the deal and its implications on both companies.
Medivation shares are up nearly 20% to $80.40 after pharma giant Pfizer stepped up and acquired the company for $81.50. following the acquisition announcement. Subsequently, Canaccord analyst John Newman raised his price target for MDVN, from $70 to $82, while reiterating a Buy rating.
Newman commented, “In our view, earlier use of Xtandi can drive long-term revenue expansion, but near term we would expect Pfizer to add significant promotional effort targeting urologists, given slow Xtandi uptake here to date.”
The analyst continued, “Assuming deal close, we believe PFE will seek to gain control of US pricing and inventory control from Astellas, given PFE’s size and sales structure. Pfizer is likely to commit additional sales assets to promoting Xtandi in the US, as faster uptake among urologists will be important to succes. As a result, we believe Pfizer will want control of US pricing and inventory.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Newman has a yearly average return of -13.1% and a 33% success rate. Newman has a -18.1% average return when recommending MDVN, and is ranked #4017 out of 4122 analysts.
BMO Capital analyst Alex Arfaei took the same route, reiterating an Outperform rating on shares of Pfizer, with a price target of $40.00, which represents a potential upside of 15% from where the stock is currently trading.
Arfaei briefly gave his two cents about the acquisition, noting, “The addition of Xtandi and a key pipeline asset in Talazoparib should alleviate concerns about Pfizer’s Innovative segment, including overreliance on Ibrance and slowing Prevnar sales. With the Medivation deal and the recent Anacor acquisition, we have increased confidence in PFE’s Innovative portfolio and pipeline and reiterate our Outperform rating.”
According to TipRanks.com, analyst Alex Arfaei has a yearly average return of 6.5% and a 65.5% success rate. Arfaei has a 7.6% average return when recommending PFE, and is ranked #595 out of 4122 analysts.
Out of the 11 analysts polled by TipRanks (in the past 3 months), 7 rate Pfizer stock a Buy, while 4 rate the stock a Hold. With a return potential of 17%, the stock’s consensus target price stands at $40.89.