By
Cindy Johnson
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More Articles
June 6, 2011
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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Gen-Probe (Nasdaq: GPRO ) dropped 13% in intraday trading today after disappointing news about the company's attempt to be acquired.
So what: Gen-Probe announced on April 28 that it was pursuing "strategic alternatives" and had hired Morgan Stanley (NYSE: MS ) to seek an acquirer. Today's Wall Street Journal is reporting that Novartis (NYSE: NVS ) appears to be the last remaining potential acquirer and may not go through with a deal.
Now what: Gen-Probe stock popped on the news it was seeking an acquirer and has since outperformed the market by more than 20%. Potential buyers -- Life Technologies (Nasdaq: LIFE ) and Thermo Fisher Scientific (NYSE: TMO ) reportedly probed the deal but are now out of the picture -- may be balking at the price. With EPS expected to grow only 15% over the next three to five years, it would take a lot of synergy and cost savings to justify the purchase at the current P/E ratio of 37 times.
Interested in more info on Gen-Probe? Add it to your watchlist by clicking here.
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