Ocata Therapeutics (OCAT) Stock Soars on $379 Million Astellas Pharma Deal
NEW YORK (TheStreet) -- Ocata Therapeutics (OCAT) stock is advancing 89.13% to $8.44 on heavy trading volume on Monday morning after the company agreed to be acquired by Tokyo-based Astellas Pharma (ALPMY) in a $379 million transaction.
On November 25, Astellas subsidiary Laurel Acquisition will launch a tender offer of $8.50 per share in cash, a 79% premium to Ocata's closing share price on November 6.
The tender offer period will expire 20 business days after it begins and may be extended, but not past May 9, 2016.
Ocata, a Marlborough, MA-based a biotechnology company, will become part of Astellas's research and development team, focusing on cell therapy to address eye-related conditions
Ocata's board has approved the deal and recommends shareholders to accept the offer.
So far today, 3.79 million shares of Ocata have exchanged hands, compared with its average daily volume of 463,006 shares.
Separately, TheStreet Ratings team rates OCATA THERAPEUTICS INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:
We rate OCATA THERAPEUTICS INC (OCAT) a SELL. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OCAT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.63%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Net operating cash flow has decreased to -$6.70 million or 28.39% when compared to the same quarter last year. Despite a decrease in cash flow OCATA THERAPEUTICS INC is still fairing well by exceeding its industry average cash flow growth rate of -46.79%.
- Along with the stagnant revenue growth, the company underperformed against the industry average of 11.3%. Since the same quarter one year prior, revenues have remained constant. The stagnant revenue growth has not kept the company from increasing earnings per share.
- OCATA THERAPEUTICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OCATA THERAPEUTICS INC reported poor results of -$1.33 versus $0.00 in the prior year. This year, the market expects an improvement in earnings (-$0.78 versus -$1.33).
- Compared to other companies in the Biotechnology industry and the overall market, OCATA THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: OCAT
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.