Acquisitions in the health care industry show no signs of slowing down. Animal health company, Zoetis Inc. ZTS surged to hit a 52-week high of $55.38 on Jun 25 after rumors related to Valeant Pharmaceuticals International Inc. VRX being interested in acquiring Zoetis surfaced. Valeant was up 1.8% on the buzz.
Why Zoetis?
Zoetis, which was spun off from Pfizer Inc. PFE in 2013, is a global leader in the discovery, development, manufacture and commercialization of animal health medicines and vaccines. The company has a wide presence in more than 120 countries.
Zoetis boasts a robust and diversified product portfolio. It is divided into five categories – anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals for veterinarians and livestock producers. The company reported revenues of $4.8 billion in 2014.
Our Take
We will not be surprised to see a formal announcement related to the rumored Valeant-Zoetis transaction. Zoetis has been considered a lucrative takeover target for a while now. We can also see a potential bid from Bayer BAYRY, which also has a strong animal health unit.
Valeant has been quite aggressive on the acquisition front for the last couple of years. After a failed takeover attempt in 2014 to acquire Allergan Inc., Valeant acquired Salix Pharmaceuticals Ltd. in April this year.
Valeant carries a Zacks Rank #1 (Strong Buy), while Zoetis holds a Zacks Rank #3 (Hold). Bayer is a well-ranked stock in the health care sector carrying a Zacks Rank #2 (Buy).
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