Johnson & Johnson Strong Strategic Fit For Shockwave Medical, But Medtronic, Boston Scientific Could Be Other Bidder, Says Analyst

Tuesday, Shockwave Medical Inc SWAV shares traded higher following a Wall Street Journal report suggesting Johnson & Johnson JNJ is reportedly in talks to acquire the company.

Shockwave Medical is a cardiovascular medical device.

In 2022, Johnson & Johnson acquired heart failure device-focused Abiomed Inc. for an upfront payment of $380.00 per share in cash, corresponding to an enterprise value of approximately $16.6 billion. 

Piper Sandler says it has considered Johnson & Johnson a potential buyer due to its interest in expanding into cardiovascular devices and strong financial position. 

Additionally, there were reports in May 2023 indicating Johnson & Johnson’s interest in acquiring Shockwave Medical. However, the Piper analyst writes that Shockwave Medical could thrive independently, maintaining the Overweight rating.

Piper’s analysis suggests that acquiring Shockwave Medical would likely require a substantial offer due to its profile. 

Compared with Johnson & Johnson’s acquisition of Abiomed, which was about 12.5x consensus 2024 revenue without milestones and closer to 13.7x with milestones, it provides a benchmark. 

Shockwave Medical reportedly sought bids around the mid-$300s per share, Piper notes, citing a StreetInsider report. 

While a Johnson & Johnson-Shockwave Medical combination seems suitable, other major players like Medtronic Plc MDT and Boston Scientific Corporation BSX, with their focus in interventional cardiology and peripheral vascular, could also be interested. 

Both Medtronic and Boston Scientific had shown previous interest in acquiring Shockwave Medical.

The absence of obvious FTC issues suggests regulatory clearance wouldn’t be a major hurdle. A competitive bidding process could emerge, with Johnson & Johnson viewed as a strong strategic fit for Shockwave Medical.

Price Action: SWAV shares closed higher by 2.07% at $322.61 on Wednesday.

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