NEW YORK (TheStreet) -- Shares of Forest Laboratories FRX are up 2.26% to $91.87 in pre-market trade after the company announced that it agreed to acquire Furiex Pharmaceuticals (FURX) in a deal worth up to $1.33 billion that expands Forest Labs' presence in gastroenterology, according to the Wall Street Journal.
Furiex stock is surging, up 29.74% to $103.99 in pre-market trade.
Forest Labs agreed to pay $95 a share for the drug development collaboration company, a 19% premium to Friday's close.
The company also is offering as much as $30 a share, or $360 million, in contingent value rights tied to Furiex's lead product candidate eluxadoline for irritable bowel syndrome, the Journal reported.
TheStreet Ratings team rates FOREST LABORATORIES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FOREST LABORATORIES (FRX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 22.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FRX's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 111.7% when compared to the same quarter one year prior, rising from -$153.61 million to $17.96 million.
- Net operating cash flow has significantly increased by 868.95% to $202.93 million when compared to the same quarter last year. In addition, FOREST LABORATORIES has also vastly surpassed the industry average cash flow growth rate of -22.12%.
- The gross profit margin for FOREST LABORATORIES is currently very high, coming in at 84.89%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FRX's net profit margin of 2.04% significantly trails the industry average.
- You can view the full analysis from the report here: FRX Ratings Report