BioMarin could be very ‘digestible’ to larger cap peers in US/Europe – analyst

BioMarin (NASDAQ:BMRN) could be a takeover target for a larger-cap peer in the U.S. or Europe after a Reuters report that activist Elliott Management has taken a stake in the biotech firm, according to a Bank of America analyst.

“We suspect the universe of buyers could be quite meaningful, and importantly, we don’t anticipate major FTC headwinds given the nice markets and relatively small deal size,” BofA analyst Geoff Meacham, who has a buy rating and a $170 price target on BioMarin, wrote in a note on Tuesday. BioMarin has a market cap of about $16 billion.

The analyst’s comments come as BioMarin (BMRN) shares surged 12% on Tuesday after the Reuters report that prominent activist Elliott had taken a $1 billion stake in the biotech company and had been in discussions with the firm for months, though details of the discussions were unclear.

Earlier Tuesday, a Bernstein analyst wrote that it’s possible that while Elliott’s intention may be to persuade BioMarin to sell itself, as the activist was successful doing with Alexion and Allergan, it may be less likely after BioMarin (BMRN) last week announced a new CEO.

“We don’t see any major events on BioMarin’s horizon that would meaningfully change its valuation,” BofA’s Meacham added. “In fact, we suspect that commercial execution is the more important factor, given the early stage nature of its pipeline. That said, we’d argue that BioMarin’s pipeline provides optionality, especially as we don’t think the totality of the assets is reflected in the Street’s forecasts.”