Piper Jaffray Says Quidel Shares Can Continue To Rise On The Back Of New Deal With Alere

Analysts at Piper Jaffray turned bullish on Quidel Corporation QDEL, mostly due to the company's "sweetening" of its already attractive Alere Inc ALR asset acquisition. The firm's William R. Quirk upgrades Quidel's stock rating from Neutral to Overweight with a price target boosted from $35 to $50.

Quidel, a diagnostics maker, announced in July it would buy Alere's triage assets but on Monday announced it has revised the agreement to now include the full worldwide BNP business, Quirk highlighted. While the revised deal implies an additional $48 million in BNP revenue, more importantly, the deal will add $50 million to $60 million in EBITDA. In fact, the entire deal could now boost Quidel's annual EBITDA by around $100 million.

The analyst's 2018 earnings per share estimate were also moved higher by 64 percent to $1.34 per share and then rise another 41 percent in fiscal 2019.

"Whether it is luck or being at the right place at the right time, we believe Quidel has done it again and sweetened its already attractive Alere deal," the analyst emphasized.

Looking forward, Quidel's stock is expected to move higher as investors begin to digest the revised deal and accretion estimates, the analyst added. As such, a new multiple of 4x 2018 EV/pro forma revenue is appropriate as opposed to a prior 3x multiple which derives the analyst's new $50 price target.

At last check, shares of Quidel were up 8.12 percent at $44.23.

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