As chatter about a sale of Salix Pharmaceuticals Ltd.SLXP +2.12% pushes up its stock price once again, one heretofore bullish analyst cut her rating on the drug maker’s tumultuous stock.
Sterne Agee analyst Shibani Malhotra changed her rating from buy to
neutral saying that at its stock, trading Friday at $151.41, is fairly
valued based on fundamentals. Ms. Malhotra has had a 12-month
fundamental price target of $145, which she has kept in place.
“We continue to believe that Salix remains an acquisition candidate
and that it is highly unlikely the company will remain independent over
the next 12 months, we simply cannot recommend putting new money into
SLXP shares at current valuation as such a recommendation would be on
M&A speculation alone,” she wrote in a research note.
Investors betting on a deal for Salix
have been on a wild ride over the past six months. Salix’s shares
tumbled to $91.47 per share in November when the company announced a major accounting revision, along with the resignation of its CFO and lowered earnings guidance.
Ms. Malhotra correctly predicted the
stock’s return to roughly $145 per share on fundamental value and had
cited the possibility of a transaction as likely. Shares of the company
are up nearly 66% since they were rocked by that news.
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