uploads///Shire

Why Shire Stock Rose in the Week Ended March 29

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Apr. 3 2018, Published 11:05 a.m. ET

Shire’s stock performance

On March 29, 2018, Shire (SHPG) was trading at $149.39, which represented a 21% rise from its 52-week low of $123.73. On March 26, 2018, Shire was trading at $128.54. It rose ~16% in the week to reach $149.39 on March 29.

Shire is a pharmaceutical company that’s focused on the development of drugs for the treatment of rare diseases.

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Reasons for growth

Japanese drugmaker Takeda Pharmaceutical Company (TKPYY) has expressed interest in considering a bid to acquire Shire. Takeda’s consideration of Shire is in its preliminary stage. The news from Takeda primarily led to a rise in Shire’s stock price. Takeda acquired Millennium Pharmaceuticals in 2008 and Ariad Pharmaceuticals in 2017 for $9 billion $5 billion, respectively. Takeda’s purchase of Shire could top $40 billion.

Takeda’s acquisition of Shire is expected to create a solid establishment for Takeda in the US biotechnology space.

On March 26, 2018, Shire entered into a collaboration with NanoMedSyn for the evaluation of a potential enzyme replacement therapy (or ERT) that will utilize NanoMedSyn’s proprietary AMFA derivatives.

Shire reported revenue of $15.2 billion in 2017, which reflected a ~33% rise on a year-over-year basis. In 2017, Shire reported net income of $4.3 billion and diluted earnings per share of $14.05.

Analysts’ recommendations

Of the 16 analysts tracking Shire in April 2018, six have recommended “strong buys,” while eight have recommended “buys.” Two analysts have recommended “holds” on Shire stock. On April 2, Shire had a consensus 12-month target price of $194.31, which represents a ~30.1% ROI (return on investment) over the next 12 months.

Peers’ ratings

Of the 25 analysts tracking Allergan (AGN) in April 2018, ~68% have recommended some form of a “buy” rating. On April 2, Allergan had a consensus 12-month target price of $215.91, which represents a ~28.3% ROI over the next 12 months.

Of the 12 analysts tracking Horizon Pharma (HZNP) in April 2018, ~92% have recommended some form of a “buy” rating. On April 2, Horizon Pharma had a consensus 12-month target price of $19.58, which represents a ~37.9% ROI over the next 12 months.

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