Friday, September 03, 2010

Genzyme (NASDAQ:GENZ): See 90% probablity GENZ gets $80/share - Leerink

Leerink Swann is now out commenting on Genzyme (NASDAQ:GENZ) upping their rating to Outperform (previously MP followed by NR).

The firm is hosting a conference call at 11AM EST to discuss their analysis of historical unsolicited bids that has driven them to reinstitute an OP rating for GENZ.

Leerink notes they have reviewed historical unsolicited bids for 20 healthcare and 66 non-healthcare stocks over the past seven years. Based on this assessment, plus a history of stock-trading patterns, combined with commentary from GENZ and SNY management (on conference calls and in the media), they are resuming a rating on GENZ with an OP; Firm's risk-adjusted 6-month valuation is $78/share. They estimate 90% probability of a successful sale of GENZ (to SNY or other White Knight); 6 months to deal finalization; and final sale price of ~$80/share. If GENZ is not acquired, they believe shares will trade to the high-$50s. Leerink's estimate changes are to reflect Shire's 2Q10 update on Replagal sale and limited capacity until Framingham facility comes on line.

Better Than Sticking a Finger in the Air. While they recognize that each potential M&A transaction is unique, they use their historical precedent analysis to guide our valuation and rating as a more tangible methodology. We believe commentary by GENZ management in the press (suggesting openness to sale of the company), an activist shareholder group, and SNY management highlighting the global opportunities for GENZ products and meaningful synergies outside of genetic health support the analysis they have conducted here.

Notablecalls: Not sure there's a trade here but certainly interesting to see Leerink come out and put their foot down @ $80 per share.

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