BMO Capital Markets biotech analyst Jim Birchenough is a big fan of upgrading his stocks based on unsubstantiated reports of takeover interest published in the foreign press. 

Take Ariad Pharmaceuticals (ARIA), which Birchenough upgraded Friday to outperform with a $14 price target in response to the Daily Mail article published Wednesday night speculating about an Eli Lilly (LLY - Get Report) takeout offer of $20 per share.

The headline on Birchenough's Ariad notes reads, "Platform, Pipeline, Products Should Attract Pharma Interest; Upgrading to Outperform." Inside, he says:

ARIA shares saw strength yesterday following lay press reports of potential large pharma interest in acquiring the company (Daily Mail: Eli Lilly (LLY) hopes to buy Ariad Pharmaceuticals (ARIA) for as much as $20/share)... We believe there is significant value to be realized from ICLUSIG, AP26113, and the company's highly efficient drug discovery platform and believe that ARIA assets are likely to attract large pharma interest.

Hmm... Sounds familiar. And yes, it is!

Last October 16, Birchenough reiterated an outperform rating on Receptos  (RCPT) and raised his price target to $40. Why? I'll let him explain:

Receptos (RCPT) shares have been strong today on an article in an Israeli business publication suggesting that Celgene  ( CELG - Get Report) and Teva  ( TEVA - Get Report) are considering an acquisition of the company at valuations >$700M ("Teva, Celgene Bidding More Than $700M for Receptos," Calcalist). The focus of attention here is on RCPT's selective S1P1 modulator RPC-1063, in phase 2 development for multiple sclerosis (MS) and ulcerative colitis (UC), and approaching phase 3 initiation in MS by year-end 2013. While CELG "does not comment on market speculation" and wouldn't confirm interest in RCPT, the company acknowledged that it was open to expanding its focus in Inflammation and Immunology (I&I) beyond rheumatologic and dermatologic indications and does have the bandwidth to bring in outside mid-stage assets while continuing to increase operating margins.

Three months later, we're still waiting for Receptos to be acquired.

Ariad: Deja vu! 

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.