NEW YORK (TheStreet) -- Shares of Shire (SHPG) are up 4.96% to $250.44 in heavy trading volume after it was reported that the drug maker is negotiating with AbbVie (ABBV) for a deal to combine the two firms after the U.S. company raised its takeover offer to about $51.5 billion, sources say, Bloomberg reports.
AbbVie CEO Richard Gonzalez met in New York with officials from Shire for the discussions, which are at an early stage, sources added, and the talks may not lead to an agreement, Bloomberg noted.
AbbVie shares are lower by -1.39% to $54.60.
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, solid stock price performance, notable return on equity, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, SHPG's share price has jumped by 147.68%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SHPG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- 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 255.6% when compared to the same quarter one year prior, rising from $64.80 million to $230.40 million.
- Net operating cash flow has significantly increased by 53.42% to $246.10 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.55%.
- You can view the full analysis from the report here: SHPG Ratings Report