Cowen Downgrades LDR Holding Following Zimmer Biomet Acquisition

Cowen downgraded LDR Holding Corp LDRH to Market Perform from Outperform following its deal to be bought by Zimmer Biomet Holdings Inc ZBH for $37 a share.

"With shares of LDRH trading near the acquisition price, we are downgrading shares of LDRH to Market Perform and raising our price target to $37/sh, the acquisition price by ZBH," analyst Joshua Jennings wrote in a note.

Further, Jennings isn't expecting any competing bids and doesn't see any anti-trust hurdles that would delay the close of the transaction.

Jennings said the acquisition provides Zimmer with access to the attractive cervical disc replacement market, which represents one of the most compelling growth segments in the Spine industry.

"We have historically forecast LDRH's revenue growth trajectory at a sustainable 15-17% (with potential acceleration in the outyears) and the exclusive technology portfolio will clearly inject a growth infusion into ZBH's Spine franchise which experienced a decline in 1Q'16," Jennings noted.

Meanwhile, the complementary portfolios should drive sales synergies particularly for Mobi-C.

"We are positive on the implications of the deal to better position the combined entity to compete for large hospital vendor contracts," Jennings added.