Given Imaging shares rise on acquisition news

NEW YORK -- Shares of Given Imaging Ltd. rose Thursday, after the Israeli maker of pill-sized diagnostic cameras said it acquired a U.S.-based gastrointestinal diagnostics company.

THE SPARK: Given Imaging said it bought the assets of SmartPill Corp. for $6 million, plus possible additional payments based on the sales of the company's SmartPill product between 2013 and 2016.

THE BIG PICTURE: The SmartPill is a swallowable capsule that measures pH, pressure and temperature in the gastrointestinal tract. Like Given Imaging's PillCam, the SmartPill transmits data to a recorder worn by the patient and is used to diagnose disorders such as gastroparesis and constipation.

Given Imaging said it doesn't expect the acquisition to affect its fourth-quarter revenue significantly, but it should result in a "low single-digit increase" in its 2013 revenue.

THE ANALYSIS: Cantor Fitzgerald analyst Jeremy Feffer backed his "Buy" rating and $22 price target for the company.

"This is a small deal ($6 million plus earn outs) but fits in nicely with Given's existing portfolio of minimally invasive GI diagnostic tools," Feffer wrote in a note to investors.

The analyst added that the addition of SmartPill helps broaden a still growing business, but its minimal cost doesn't hamper the company's ability to take advantage of other opportunities.

THE SHARES: Up 31 cents, or 2 percent, to $15.91, after jumping as high as $16.25 earlier in the day. Over the past 52 weeks, the company's shares have traded between $12.14 and $19.95.