NEW YORK (TheStreet) -- NPS Pharmaceuticals (NPSP) shares are up 8.2% to $45.36 on heavy volume in early market trading today after the company agreed to be bought by Britain's Shire plc (SHPG) yesterday for $5.2 billion.
The purchase price comes to about $46 per share, almost 10% more than the stock's previous closing price on Friday.
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"We will deliver NPS's pharmaceuticals to even more patients globally and enhance their growth. We see a huge opportunity in the rare disease space and we are thoughtfully focusing our organization in this manner," said Shire CEO Flemming Ornskov in a conference call.
The deal is the second billion dollar acquisition the company has made in the past year after the company completed its purchase of ViroPharma Inc. for $4.2 million in January 2014.
TheStreet has further coverage of the deal here.
TheStreet Ratings team rates NPS PHARMACEUTICALS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NPS PHARMACEUTICALS INC (NPSP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NPSP's revenue growth has slightly outpaced the industry average of 41.3%. Since the same quarter one year prior, revenues rose by 45.9%. 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.
- The gross profit margin for NPS PHARMACEUTICALS INC is currently very high, coming in at 95.92%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.75% is in-line with the industry average.
- Net operating cash flow has significantly increased by 106.24% to $0.43 million when compared to the same quarter last year. Despite an increase in cash flow, NPS PHARMACEUTICALS INC's cash flow growth rate is still lower than the industry average growth rate of 117.49%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 97.4% when compared to the same quarter one year ago, falling from -$1.09 million to -$2.15 million.
- You can view the full analysis from the report here: NPSP Ratings Report