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Analyst Finds Perrigo 'Still Attractive' As Take Out Target

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Despite Perrigo Company plc Ordinary Shares (NYSE: PRGO)'s rejection of a $205 a share offer, the company remains an attractive takeover target, an analyst said Wednesday.

"Either now or in the future, we can't rule out broader strategic interest in Perrigo," said J.P. Morgan's Chris Schott, who maintained an Overweight rating and $215 target.

Perrigo, an Ireland-based generic drug-maker, said Tuesday that Mylan NV (NASDAQ: MYL)'s $29 billion offer undervalues Perrigo, with its recent $4.5 billion acquisition of Omega Pharma.

Perrigo gained 3 percent recently to $198.63.

Schott noted the generic drug sector is "rapidly consolidating" and estimated that Perrigo is worth $180 a share on a "stand-alone basis" -- his $215 price target includes $35 a share to account for "M&A optionality."

Although a higher bid from Mylan would be "unsurprising" according to Schott, Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA) recent $40 billion bid for Mylan makes that less likely.

Perrigo managers declined comment in a conference call Tuesday on broader strategic interest in their company. "But they did acknowledge some logic behind a merger with a larger organization," Schott concluded.

Latest Ratings for PRGO

DateFirmActionFromTo
May 2018Wells FargoMaintainsMarket PerformMarket Perform
Mar 2018JP MorganMaintainsNeutralNeutral
Feb 2018BerenbergInitiates Coverage OnBuy

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