After President Trump blocked the Broadcom Ltd. (AVGO) bid for Qualcomm Inc. (QCOM) based on "national security concerns," the broader deal making landscape took a hit. But at least one sector looks to be largely unfazed by the president's decree.

"The one industry that may be unaffected by 'National Security' concerns would be SMID-cap Biotech," Jefferies analysts wrote in a note to clients. "Balance sheets are flush with cash and there is a need to grow for large health care companies."

"We still think it makes sense to see M&A activity rise, as companies have plenty of cash, tax laws favor deal activity, valuations are still high, and capital markets remain wide open," Jefferies analysts wrote. "Larger companies need to grow their earnings and will look down the market cap spectrum to find opportunities especially with market valuations well above their long-term averages."

According to Jefferies, there are 15 small- to mid-cap biotech companies that could be particularly ripe for the picking when it comes to acquisitions: Abeona Therapeutics Inc. (ABEO) , Acorda Therapeutics Inc. (ACOR) , Amarin Corp. plc (AMRN) , AveXis Inc. (AVXS) , BioCyst Pharmaceuticals Inc. (BCRX) , Dova Pharmaceuticals Inc. (DOVA) , Esperion Therapeutics Inc. (ESPR) , Immunomedics Inc. (IMMU) , Neurocrine Biosciences Inc. (NBIX) , Rigel Pharmaceuticals Inc. (RIGL) , Sierra Oncology Inc. (SRRA) , Spectrum Pharmaceuticals Inc. (SPPI) , TG Therapeutics Inc. (TGTX) , TherapeuticsMD Inc. (TXMD) and Urogen Pharma Ltd. (URGN) .

Part of the boost in deal activity could come from high valuations, Jefferies noted. "Looking across the Russell 3000, when the P/E has been above average, an average of 108 deals are completed during the year, whereas when the P/E has been below average 94 transactions take place," analysts found. While that seems somewhat counterintuitive, management as an acquirer likely just feels better about doing an acquisition when the value is high, analysts added.

It's worth noting that Jefferies found in the biotech sector that the company that does the acquiring has traditionally outperformed. That's not typically the case in the market, but biotech names have, on average, outperformed by about 400 basis points in the six and 12 months following a deal.

And there's no shortage of cash among those acquirers: according to Jefferies, five of the large-cap biotech companies in its coverage expect that $80.7 billion in cash is held outside the U.S. and will return to this country to be deployed.

Jefferies noted that many investors down market cap are "significantly underweight" in the biotech space. "But if M&A activity is truly upon us, they will get left behind if they don't have enough exposure," analysts wrote. "The premiums paid for Biotech companies in SMID Caps are far better than that of the overall universe and even better than other Health Care companies."

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