NEW YORK (TheStreet) -- Shares of Shire Plc (SHPG) are surging, up 6.29% to $172.67, after Allergan Inc. (AGN), facing an unsolicited bid from Valeant Pharmaceuticals International Inc. (VRTX), is preparing to approach Shire again about a potential takeover after being rebuffed in recent months, sources told Reuters today.
Allergan, the maker of Botox with a market capitalization of nearly $50 billion, is trying to stay independent. It held talks in recent months with Shire about a potential takeover that did not pan out, Reuters reported last week.
TheStreet Ratings team rates SHIRE PLC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SHIRE PLC (SHPG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
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 slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SHPG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SHPG has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Pharmaceuticals industry and the overall market, SHIRE PLC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Powered by its strong earnings growth of 1172.72% and other important driving factors, this stock has surged by 80.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- SHIRE PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SHIRE PLC increased its bottom line by earning $7.36 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($9.48 versus $7.36).
- You can view the full analysis from the report here: SHPG Ratings Report