UPDATE: JP Morgan Reiterates Baxter International at Overweight; Gambro Expensive but Worth It

JP Morgan reiterated its Overweight rating on Baxter International

along with its previous $48 price target. JP Morgan said, "A $4B purchase price would value Gambro at 2.4x 2011 sales and 12.7x 2011 EBITDA. Extrapolating off the 9 month numbers for 2012 gets you to 2.5x 2012 Revs and 16.3x EBITDA, though again this includes the impact of the Italian quake. By comparison, Baxter trades at 9.7x 2013E EBITDA, with slower growth peers trading at 7-8x. … That said, a Gambro acquisition would (a) allow Baxter to utilize its OUS cash and (b) given the interest currently being earned on this cash and the cost to borrow, the deal would on a cash basis almost certainly be accretive, despite the price tag. It would obviously change in a significant way Baxter's presence in the hemodialysis market, complementing its current leadership in peritoneal dialysis." Baxter International closed at $58.43 on Friday.