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Jefferies upgrades Dechra Pharmaceuticals after Dutch acquisitions
Jefferies upgraded its stance on veterinary pharmaceutical company Dechra Pharmaceuticals to 'buy' from 'hold' and lifted the price target to 2,322p from 2,221p following the group's acquisition of Dutch firms AST Farma and Le Vet
The bank reckons these two deals give Dechra a springboard both to grow the pipeline and improve its reach into the EU. It said that despite the share price rally on the back of the deals, market consensus should still move higher when visibility improves on mid-term drivers.
Jefferies pointed out that as a result of the acquisitions, Dechra will gain access to a broad portfolio of over 90 products marketed in the Netherlands, 60 of which are sold in the EU. It will also gain 30 pipeline products.
Dechra announced last week that it was buying AST Farma and Le Vet for 340m. The company said it would pay 75% in cash and the rest in new shares, which would be subject to a two year lock-in.
It also said it would place 5,121,952 new ordinary shares at a price of 2050p each through an accelerated bookbuild.
AST Farma focuses on generic and generic plus products, while Le Vet largely works on European markets.
At 1250 GMT, the shares were up 0.9% to 2,342p.