Leerink Analysts Hike Shire Outlook, See Next Big Blockbuster Coming

• Shares of Shire PLC (ADR) SHPG have been volatile in 2015 and are down 2.6 percent year-to-date.
• Leerink’s Jason M. Gerberry upgraded the rating on the company from Market Perform to Outperform, while raising the price target from $220 to $239.
• Recent pullback, positive OPUS-3 study results and acquisition of Dyax are the attractive features of the Shire story, Gerberry stated.

The recent pullback in Shire’s shares have created an attractive entry point, analyst Jason Gerberry mentioned. Management has assured investors that they will structure a deal for Baxalta Inc BXLT in the interest of Shire’s shareholders.

Shire’s earlier unsolicited bid for Baxalta was rejected. The offer now stands at a 27 percent discount to the initial transaction value, and an all equity offer, even with significant share repurchases, would be dilutive to Shire’s shareholders, Gerberry.

The analyst believes that Shire can either wait for six months to a year post-spin before making a greater cash offer or walk away from the bid.

Gerberry pointed out that recent positive OPUS-3 study results and the acquisition of Dyax Corp. DYAX bring two potential best-in-class drugs to Shire’s portfolio, besides providing it with more visible revenue drivers.

The completion of the Dyax deal in 1H16 will add a potential best-in-class prophylactic to Shire’s pipeline. “With a strong market and a highly differentiated therapy, we see SHPG positioned to dominate the HAE segment for the next 10-15 year,” the Leerink report added.

The company’s strong orphan and ophthalmology business strengthens its positions versus peers for sustainable growth in a challenging environment, Gerberry commented.