UPDATE: J.P. Morgan Downgrades ViroPharma to Neutral, Raises PT Following Announcement of Acquisition by Shire

In a report published Tuesday, J.P. Morgan analyst Geoff Meacham downgraded the rating on

from Overweight to Neutral, but raised the price target from $45.00 to $50.00. In the report, J.P. Morgan noted, “We are downgrading shares of VPHM to Neutral from Overweight. This is based on the announced Shire (rated Overweight by JPM European Healthcare analyst James Gordon) acquisition of ViroPharma for $50/share. Overall, we believe the transaction makes sense from a strategic perspective and does not come as a complete surprise, given synergies and recent news reports that ViroPharma was in an auction process (source: Bloomberg). The addition of Cinryze for prophylaxis complements Shire's current hereditary angioedema (HAE) business, which consists of Firazyr for acute treatment. Indeed, Shire expects cost synergies of $150M by 2015. Since Cinryze and Firazyr address different segments of the HAE market, we do not anticipate antitrust issues; the transaction could close as early as YE13. As such, we see little room for upside, and we doubt another bidder emerges. We are increasing our Dec 2014 PT to $50/share, which is the deal price, and downgrading VPHM shares to Neutral from Overweight.” ViroPharma closed on Monday at $49.42.