Laboratory Corp. of America Holdings LH shares are reacting negatively to the news that it is acquiring Covance Inc. CVD, with LabCorp trading down nearly 8 percent at $100.91.
Darren Lehrich of Deutsche Bank is out in defense of the stock, saying the market is too negative on the deal and raised his price target from $116 to $120 while maintaining a Buy rating.
In his note, Lehrich said, "While Q-to-Q rev volatility in the CRO business could detract from LH's multiple, the earnings/CF from this deal should allow LH to re-rate, over time, as investors gain appreciation for the strategic opportunities this deal should present. As such, we defend Buy and raise PT to $120 (from $116) as we believe deal provides upside risk to ests."
Shares of Covance were trading 25 percent higher at $100.28.
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