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What happened
Shares of Cynosure (CYNO), a laser maker whose products are used in aesthetic and medical procedures, rose by double-digits in early morning trading on Monday in response to a report that suggests the company is looking to sell itself.
So what
Traders are responding to a Bloomberg article that states Cynosure is "exploring strategic options including a sale." Bloomberg states that the company is discussing the matter with financials advisors. All of this information is coming from "people familiar with the matter."
While the article was light on details, it did suggests that big companies in the aesthetic market -- such as Botox maker Allergan Plc -- could be interested in making an offer. That news caused an analyst from Northland Capital to speculate that Cynosure's stock could fetch as much as $60 per share or more in a deal. That figure represents a strong premium to Friday's closing price of $43.85.
As of the time of this writing, neither Cynosure or Allergan have been willing to comment on the merits of this information.
Now what
Cynosure's recent financial performance has been extremely strong, so perhaps it isn't much of a surprise to see that the company could be an acquisition target. Last quarter, Cynosure produced revenue growth of 36%, expanded its margins, and grew its net income by 43%. Those are solid results that more than justify the company's premium valuation.
Of course, without official confirmation from Cynosure, it is hard to know what to make of Bloomberg's report. Potential shareholders should do their best to ignore today's price action and should only consider buying shares if they believe Cynosure is a compelling investing idea based on its own merits.
