Tesaro Stock Up over 16% on Rumors of Acquisition by Roche



Tesaro stock jumps on acquisition rumour

Yesterday, Tesaro (TSRO) stock rose ~16.3%, triggered by rumours of an acquisition bid by Roche (RHHBY), which registered a stock price rise of ~2.1%. However, the two companies didn’t make any comments regarding the rumored acquisition bid.

Roche and Tesaro already have an ongoing collaboration for the evaluation of Roche’s Tecentriq in combination with Zejula for the treatment of bladder cancer. The combination is also being evaluated for the treatment of a form of ovarian cancer. The slide below shows the company’s oncology portfolio.

On June 5, Tesaro stock rose ~3.1% in pre-market trading after the company announced a clinical collaboration agreement with Genentech.

Financial performance and analysts’ estimates

Tesaro registered sales of $223.3 million in fiscal 2017 and $49.7 million in Q1 2018. As per Wall Street analysts, the company is expected to register sales of $304.7 million in fiscal 2018.

Also per Wall Street analysts, the consensus target price for the next 12 months for TSRO stock is $80.4, representing a potential return of ~71% on the basis of the company’s stock price of $46.49 yesterday. Currently, the company is trading near its 50-day moving average of $46.10 and below its 200-day moving average of $60.38.

Wall Street views on the speculated acquisition

As per RBC analyst Kennen MacKay, the two companies’ combination is unlikely. The analyst sees the acquisition as lacking compelling rationale. He notes that one of Tesaro’s key drugs, Zejula, an ovarian cancer drug, is facing intense competition in the market from Astrazeneca (AZN) and Clovis Oncology (CLVS). The drug is also being developed for the treatment of prostate cancer in partnership with Johnson & Johnson (JNJ).

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