Phathom Pharma, Rhythm, and Vaxcyte are most likely to be targeted by pharmaceutical companies.
Zhitong Finance learned that according to investment bank Needham analysts, Phathom Pharmaceuticals (PHAT.US), Rhythm Pharmaceuticals (RYTM.US), and Vaxcyte (PCVX.US) are the most likely acquisition targets in the pharmaceutical sector. Needham rated Phathom a “buy” with a target price of $26; Vaxcyte rated “buy” with a target price of $95; and rated Rhythm as a “buy” with a target price of $50.
Needham analyst Joseph Stringer wrote in a report on Friday that these three companies are the most likely to be acquired within the scope of Needham's research. Stringer wrote in the report: “We believe that during the rest of 2024, mergers and acquisitions will remain above average and lean more towards mid-sized companies, with deals between $1 billion and $3 billion, with a particular focus on the fields of oncology, immunization, and rare diseases.”
Stringer emphasized that there were 13 mergers and acquisitions in the first quarter, far higher than the quarterly average of 8.2 since 2018, and 7 listed company transactions higher than the 4.9 quarterly average since 2018.
Stringer anticipates that Bayer, Roche, and Regenerative (REGN.US) are most likely to acquire early-stage companies. Takeda Pharmaceuticals, BIIB.US, Bristol-Myers Squibb (BMY.US), and PFE.US (PFE.US) are most likely to acquire late-stage companies.
Stringer explained, “Over the past few quarters, average deal sizes, single-day premiums, and stock purchase multiples have all hovered near their respective historical averages. The preference for late-stage companies is still evident, but we are aware that a recent series of deals to early-stage biotech companies may reflect an increase in pharmaceutical companies' appetite for risky assets.”
The Needham analyst also emphasized that the average acquisition premium appears to be falling: in the first quarter of '24, the average premium was 73%, below the historical average of 77%. Stringer also pointed out that over the past few quarters, the multiples of stock acquisitions have also shown a downward trend. Of the last 4 public deals for which financial data is available, all were below the historical average.