Hill-Rom (HRC) shares jumped almost 4% in Monday’s pre-market trading session spurred by the speculative acquisition offer made by Baxter International (BAX) for $10 billion, according to a Wall Street Journal report.
Baxter International Inc. is a U.S.-based health care company that focuses on products to treat hemophilia, kidney disease, immune disorders, and other chronic and acute medical conditions.
Hill-Rom Holdings, Inc. is a medical technology company with a primary focus on patient care solutions to improve clinical and economic outcomes.
With a current market capitalization of about $9 billion, shares of Hill-Rom have jumped 42% over the past year. (See Hill-Rom stock charts on TipRanks)
According to the WSJ, the deal could be priced at $150 per share, implying a valuation premium of 13% relative to Hill-Rom’s Friday closing price of $132.90.
Markedly, this is not the first time Baxter has proposed the acquisition of Hill-Rom. Last month, Baxter made an offer of $144.00 per share, however, Hill-Rom rejected the offer.
Recently, Robert W. Baird analyst Michael Polark increased the price target on Hill-Rom from $125 to $150 (12.9% upside potential) while reiterating a Hold rating on the stock.
Polark said that Hill-Rom shares command a valuation of $150 irrespective of the acquisition. He added, “While specific comments on the rumor of course lacked, conference call and slides did nothing to douse the smoldering embers of M&A speculation, in our view. Standalone $150/share is not crazy if consider $7+ FY23 EPS at a market multiple, consistent with long-run average relative valuation.”
Consensus among analysts is a Moderate Buy based on 4 Buys and 2 Holds. The average Hill-Rom price target of $145.60 implies 9.6% upside potential to current levels.
HRC scores a 7 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations.
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