Piper Jaffray Reiterates Neutral Rating, $58 PT On CEPH

Piper Jaffray is reiterating its Neutral rating and $58 PT on shares of Cephalon Inc. CEPH. “Last night, Valeant announced that it is making an unsolicited offer to acquire Cephalon for $73 per share in an all-cash transaction that values the company at $5.7B,” Piper Jaffray writes. “We believe a bid makes strong economic sense for Valeant Pharmaceuticals International VRX given its tax structure but more importantly provided that it makes major cuts to CEPH's R&D and sales and marketing infrastructure. “Given CEPH's chosen path of taking big and expensive R&D risks in the face of looming revenue erosion due to generic competition, we do not see meaningful value creation for CEPH shares for the foreseeable future in the absence of a major strategic transaction, bearing in mind that the pipeline endeavors could take at least 2-3 years to bear fruit (if studies are successful of course).” Cephalon closed Tuesday at $58.75.