Although shares of Biogen (BIIB) spiked as much as 10% Tuesday, to about $331 per share, on renewed acquisition rumors there may be deal premium left for investors banking on takeover chatter.
Jefferies analyst Brian Abrahams said that he believes an acquisition could bring $379 per share, laying out his base-case valuation analysis in a research note Wednesday. Cautioning that a deal is "far from certain," Abrahams speculated a bid could range between $316 per share on the low end and $439 per share on the high end.
Meanwhile, Credit Suisse analysts have modeled a purchase price between $370 and $410 per share.
The takeover talk subsided Wednesday, with a Reuters report, citing sources, that the company had received no formal expressions of interest. Biogen shares fell back to $316 in midday trading.
Indeed, not everyone is convinced of an imminent deal. "With a market cap around $70 billion, this could reduce the number of viable bidders," Morningstar analyst Karen Andersen said in a new research note.
Tie-up rumors about the company flared up most recently yesterday after weeks of speculation, when a report citing unnamed sources in the Wall Street Journal claimed that Biogen had drawn takeover interest from Merck (MRK) and Allergan (AGN) .
Allergan is not interested in buying Biogen, according to CNBC. And Jack Mohr, co-manager of TheStreet's Action Alerts PLUS portfolio, which holds Allergan, agrees that the company makes little sense as a bidder for Biogen. "It's not feasible and it doesn't make sense," said Mohr.
Although Allergan received a cash windfall on Tuesday -- it closed the sale of its generics business to Teva Pharmaceutical (TEVA) for $40.5 billion in cash and stock -- Allergan CEO Brent Saunders has said on investor calls that he is focused on reducing the company's debt, and would only consider acquisitions of companies that match or exceed the company's own growth rates.
Allergan expects earnings per share to grow 15% on an annualized basis through 2019, while Biogen expects 7% annual growth in the same period, Mohr told Real Money.
Action Alerts PLUS sold off its position in Biogen last month. "We think now is the right time to pounce and blow out of the position after an incredible 35-point swing," Mohr and Jim Cramer said in an Alert to subscribers at the time, as the stock approached their exit price of $260.
Biogen had previously announced plans to spin off its hemophilia division as an independent publicly traded company. Hemophilia products accounted for just 8% of Biogen's total revenue of $4.8 billion for the first half of this year, but the division is among the company's fastest growing with revenue up 72% over the same period last year.
In June, Biogen's John Cox, executive vice president of pharmaceutical operations and technology, stepped down to lead the new company. The spinoff is scheduled for early 2017.