Mizuho: Our "Read' Of Relypsa Management Body Language Is That Deal Talks May Not Be Imminent, Stock Could Fall Below $10

The future of Relypsa Inc RLYP’s share price may hinge entirely on a potential buyout. In fact, if the rumored buyout doesn’t end up happening, Mizuho analyst Irina Koffler believes Relypsa’s stock is headed for single-digits.

Relypsa’s stock skyrocketed 67 percent in a single day earlier this month on buyout rumors. However, yesterday Benzinga reported that Relypsa has dropped Centerview as an M&A advisor.

Related Link: Source: Relypsa Said To Have Dropped M&A Advisor Centerview Partners

Despite the company reporting in-line prescription numbers for the month of March, Koffler says Friday’s negative market reaction is not surprising considering Benzinga’s story.

“As we previously wrote in our initiation report dated April 12, if takeout interest subsides in the stock, we would expect shares to collapse below $10 due to financing risk and longer-term expense visibility,” Koffler explains.

Koffler spoke with Relypsa management following the report. While the company didn’t officially comment on financing, Koffler says that she got the feeling that deal talks are not imminent.

In the meantime, Relypsa shareholders should be watching Veltassa competitor AstraZeneca plc (ADR) AZN for any signs of delays in its review process. Koffer notes that AstraZeneca delays wouldn’t ultimately change Relypsa’s fate, but it would allow the company more time familiarize doctors with Veltassa and give potential buyers time to consider making a move.

Mizuho maintains a Neutral rating and a $22 price target for Relypsa.

Disclosure: the author holds no position in the stocks mentioned.