TD Cowen analyst Yaron Werber downgraded the rating on Springworks Therapeutics (SWTX – Research Report) to a Hold today, setting a price target of $47.00.
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Yaron Werber has given his Hold rating due to a combination of factors surrounding the proposed acquisition of Springworks Therapeutics by Merck KGaA. The acquisition is seen as a strategic fit for Merck KGaA, as it complements their focus on rare tumors and enhances their presence in the US market. However, Werber notes that the offer price of $47 per share, while reasonable, reflects a valuation that is lower than typical for oncology companies, given the uncertainties surrounding the market size for rare tumors and the lack of investor confidence in sales estimates.
Moreover, the deal is considered beneficial for both companies, with Springworks being a motivated seller and the acquisition facilitating the expansion of their products, Ogsiveo and Gomekli, into international markets. Despite the positive aspects of the deal, Werber believes a higher bid is unlikely, and the current offer price aligns with the market’s uncertainty and the company’s strategic goals. Consequently, the Hold rating reflects a balanced view of the potential benefits and the existing uncertainties.
In another report released today, Barclays also downgraded the stock to a Hold with a $47.00 price target.