Wednesday, March 17, 2021

Two Covid-19 Takeover Targets

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Wall Street Daily

Two Covid-19 Takeover Targets


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Lou BaseneseLou Basenese

Editor and Founder, Trend Trader Daily




Dear Wall Street Daily Reader,

There’s nothing that makes a stock surge higher and faster than an unsolicited takeover offer.

Just ask shareholders of GenMark Diagnostics, Inc. (GNMK). On Monday, they watched shares soar 30% at the open, as news hit that Swiss pharmaceutical giant Roche Holding (RHHBY) was buying the Covid-19 testing leader for $24.05 per share.

Now, GenMark should ring a bell for long-time readers, as almost one year ago, I officially recommended it as a no-brainer way to play the pandemic for maximum profits.

The share price at the time? 

A measly $4.15, which means some lucky readers are cashing out gains of almost 500%.

Not a bad haul for a year’s worth of waiting, right?

Here’s the good news – I fully expect the urge to merge in the diagnostics space to continue.

In fact, I’m about to share two more leading diagnostic companies that are prime takeover bait on the heels of the GenMark deal.

While gains of 500% might not be on the table anymore, there’s definitely a chance to earn a quick 50% to 100% if you act fast. 

If that doesn’t interest you, check your pulse!

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Testing, Testing, Testing

We can debate a host of potential impacts of the pandemic on work and everyday life from here on out.

Will people ever fully return to offices? Will global travel be permanently stalled? The list goes on and on.

But there’s one impact where there’s universal agreement.

No matter the virus du jour, we’re going to be tested. And tested. And tested.

That’s going to be an annoying but necessary part of everyday life. And in turn, it’s a big business, which is why Roche was so willing to pay $1.8 billion for a leader in the space.

Or as CEO Thomas Schinecker said, “Acquiring GenMark Diagnostics will broaden our molecular diagnostics portfolio to include solutions that can provide life-saving information quickly to patients and their healthcare providers in the fight against infectious diseases."

Newsflash!

But newsflash: GenMark doesn’t own a monopoly on the testing market. There are a handful of other well-established players, which represent equally compelling takeover targets.

And it wouldn’t surprise me one bit if we woke up any day now and saw news of a merger announcement for Quidel Corporation (QDEL) and/or OPKO Health, Inc. (OPK).

Again, both companies should ring a bell because I also recommended them… at much lower prices, a year ago.

Quidel is a San Diego-based company that set itself apart early in the pandemic by offering one of the first rapid Covid-19 tests.

The reason it represents such a compelling takeover target is because its pre-Covid test and diagnostics business was already booming, growing by double digits for seven consecutive years and counting.

Based on a more conservative valuation than the one paid for GenMark (5.6 times sales instead of 9 times sales), Quidel could fetch as much as $220 per share in a takeover. That represents an attractive 58% upside to current prices.

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Go Smaller to Win Bigger

I believe OPKO could fetch even more in a takeover, though. 

Why? 

Because a potential acquirer is also getting a promising drug pipeline with existing partnerships in place.

So not only would an acquirer get a testing business that’s poised to grow from the coronavirus, but they also get free options on multiple rare-disease drugs that are already in development.

Ironically, the testing division at OPKO, known as BioReference Labs, was actually a 2015 acquisition by OPKO. And it was a good one, as it generated over $1.25 billion in revenue for the parent company in the last year.

Thanks to Covid-19 testing, sales for BioReference Labs surged 157% in the last quarter alone.

Depending on the interested party, whether it’s a big pharma company that would want to add OPKO’s drugs to the pipeline or another testing company that wouldn’t want them at all, a deal for OPKO could involve the entire company or just the testing and diagnostics unit.

Either way, we’re talking about potential upside of up to 127% to current prices, based on comparable deals.

Not only is the profit potential higher for OPKO, but I believe it could be realized sooner, too.

You see, there’s already an activist agitating for a sale of OPKO’s testing business. Plus, OPKO is trading at a lower absolute price ($3.1 billion market cap vs. $5.9 billion), which makes it more affordable.

Either way, both companies represent high probability Covid-19 takeover targets in the current market.

Don’t miss out!

Ahead of the tape,

Lou Basenese

Lou Basenese
Editor and Founder, Trend Trader Daily

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Please note, Trend Trader Daily is not affiliated with Paradigm Press.

Louis Basenese is a professional investor, and one of the country’s leading technology analysts.

He’s spent the past 20 years analyzing emerging technologies, and developing a proven methodology to consistently profit from them.

Lou began his investment career at Morgan Stanley, where he was eventually tasked with directing over $1.5 billion in capital.

Based on his proven track record as a financial analyst and investor, Lou became a television commentator on Fox Business and CNBC, and a market expert in the pages of The Wall Street Journal and Business Insider. But ultimately, Lou found he preferred helping Main Street investors like you.

By providing ordinary investors with extraordinary research, he discovered that he can help his readers change their financial futures, and change their lives for the better. And that explains why he recently launched Trend Trader Daily. 

With this new service, Lou can share his research with you on groundbreaking new technologies and emerging sectors — well before he shares this information with the general public on TV, the internet, or anywhere else.

So what's one of Lou's top recommendations for right now? Click here to see what he's recommending you do to profit in 2021 and beyond... 

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