For quite some time now analysts and investors have been speculating that big pharma would go on a biotech buying binge. So, will the announcement by Biogen Idec late Friday that it's putting itself on the market be the spark that ignites an M & A explosion in the sector? Perhaps.
But before I get to that I wanted to share some analyst opinions about the leap in BIIB. "ChangeWave Biotech Investor" newsletter editor Michael Shulman is telling his subscribers, "…I like the company very much, but potential acquirers may not like it as much as the stock price reflects. It's time to take profits and close the position."
But Bernstein biotech analyst Geoffrey Porges thinks there's still upside. He writes in a research note to clients this morning, "Our analysis suggests a takeout valuation for Biogen Idec in the range of $85-$1000, with the average of the approaches we used suggesting a $92 takeout valuation…." While Wachovia's George Farmer says, "Even if a deal is reached, we would not be byers at current trading levels." He believes the move in the stock late Friday was mostly fueled by short covering--investors who were betting against the stock getting out of it before they lose their shirts. Wachovia and Bernstein make a market in BIIB.