In a report published Tuesday, Stifel Nicolaus analyst Annabel Samimy reiterated a Buy rating on Perrigo Company PRGO, and raised the price target from $125.00 to $145.00.
In the report, Stifel Nicolaus noted, “Perrigo is acquiring Irish-domiciled Elan for $8.6bn ($16.50/share, cash and equity) to gain a low-tax platform for international expansion. Elan brings a long-duration Tysabri royalty stream, Phase II R&D asset for outcome-dependent monetization or termination, and strong cash flow without stretching PRGO's balance sheet (investment-grade debt <2.2x EBITDA in 1.5-2 years). Although clinical/biotech-centered Elan seems a significant departure from PRGO's core focus on consumer/generic acquisitions, the focus should be its financial attributes (tax rate to ~17% from 30%), long-duration growth (+19% Tysabri CAGR, with royalty step-ups) and international platform. Strategically, we see further international deal-making as PRGO pursues global expansion. With deal close expected C2H13, we estimate FY14 accretion of ~$0.11 (+1.4%), growing to $1.20 (+14%) in FY18.”
Perrigo Company closed on Monday at $125.17.
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