ShoreCap downgrades Consort Medical to 'hold' after all-cash offer from Recipharm
Analysts at ShoreCap downgraded their recommendation for shares of Consort Medical from 'buy' to 'hold' following the recommended cash offer from Recipharm.
The broker had previously upped its recommendation for the shares from 'hold' to 'buy' following what it said had been an "overdone" share price reaction to the small explosion at its Cramlington facility in Northumberland in mid-July.
According to Dr. Adam Barker and Dr. Tara Raveendran at ShoreCap, their most recent 'fair value' estimate for the shares of 930.0p was based on "conservative" assumptions, especially for its Aesica unit, for which it had penciled-in an annual rate of revenue growth of approximately 2.0% - half that foreseen by management.
They also highlighted the very positive outlook for the Syrina VapourSoft Autoinjector technology of Consort's Bespak unit.
"From a strategic view we also think the deal makes sense for Recipharm who are gaining a footprint within devices (where Consort has a strong presence in Respiratory and injectables) and access to the biologics market over the medium-term (via Consort’s Syrina VapourSoft technology)," the two analysts said in a research note sent to clients.
"[...] Given the recommended offer of 1,010p per share is 1) c9% above our fair value, 2) made all in cash and 3) implies a return on capital of 5% (pre-synergies) for Recipharm, we believe that Consort Medical shareholders should accept this offer."