Seagen Raised to Outperform at RBC, Analyst Rates Takeover Chances at 95%
2022.08.16 17:13
Seagen (SGEN) Raised to Outperform at RBC, Analyst Rates Takeover Chances at 95%
By Senad Karaahmetovic
An RBC Capital Markets analyst upgraded Seagen Inc (NASDAQ:SGEN) to Outperform from Sector Perform with a $188 per share price target, up from the prior $179.00.
The analyst sees a near-term opportunity in SGEN shares given a recent pullback on the arbitration decision. The analyst says Seagen’s “position as an attractive strategic target is too intriguing to ignore.”
The upgrade call is made on the back of the increasing likelihood that “the company will no longer stand alone as well as the emerging clarity and confidence in the base commercial business from recent execution and newsflow which we believe represents a floor value for the longer term.”
The analyst also reiterated his view that SGEN is “a strategic fit for MRK”
“We increase our POS that a strategic outcome is to occur to 95% from our prior 75%. This weighted M&A premium now at $28/share (~18% overage) reflects a 95/5 chance a deal transpires in the $225 range (guided by >$200/share MRK equity investment). As a backstop, we have our fair value in shares using our standard DCF/EPS multiple at about $160/share though we acknowledge these components have been moving targets,” the analyst added in a client note.
Finally, the analyst noted that today’s upgrade is mostly a tactical M&A valuation call.
Seagen shares are up almost 2% in premarket Tuesday.
