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What Analysts Recommend for Bristol-Myers Squibb and Celgene

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Merger arbitrage opportunity

On January 3, 2019, Bristol-Myers Squibb (BMY) issued a press release, announcing its definitive merger agreement with Celgene (CELG) for a total consideration of around $74 billion or offer price of about $102.43 per share based on Bristol-Myers Squibb’s price of $52.43 on January 2. This news propelled Celgene’s stock price from $66.64 on January 2 to $80.43 on January 3 and then to $87.58 on January 7.

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However, until March 28, 2019, mounting concerns about the completion of the deal, especially in the face of the heightened opposition from activist investor Starboard Value led to Celgene’s stock price fluctuating mostly in the range of $85.00 to $90.00. However, the positive recommendations from proxy advisory firms ISS (Institutional Shareholder Services) and Glass Lewis have increased confidence among investors about the completion of the deal.

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The rise in Celgene’s stock price may be attributable to an increase in demand from investors who will hold the stock until the deal completion and from arbitrageurs seeking to benefit from the merger spread. The drop in Bristol-Myers Squibb’s stock may be attributable to merger arbitrageurs as well as to sell orders from certain disappointed investors.

Analysts’ recommendations and target price

Wall Street analysts expect an upside potential of 22.74% for Bristol-Myers Squibb based on the company’s closing price on April 1. Analysts revised upwards the company’s target price from $56.55 in February to $56.60 in March and to $57.80 in April. The current consensus analyst recommendation for the stock is “buy.”

Wall Street analysts expect an upside potential of 22.74% for Bristol-Myers Squibb based on the company’s closing price on April 1. Analysts revised upwards the company’s target price from $56.55 in February to $56.60 in March and to $57.80 in April. The current consensus analyst recommendation for the stock is a “buy.”

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