Deutsche Bank Comments on Pharmaceutical Product Development (PPDI) Following Sale Rumors

Deutsche Bank is maintaining its Hold rating and $34.50 price target on shares of Pharmaceutical Product Development (NASDAQ: PPDI) following the WJS's report today, July 18, that the company is considering going up for sale to either a private equity or a large strategic acquirer.

The article notes that Genstar Capital's PRA International may be up for sale at a ticket near $1 billion.

The firm believes that the sale of PPDI is likely due to the recent CEO transition and its ability to grow inorganically as a private company is higher.

An analyst at Deutsche comments, "We estimate that under an LBO scenario which assumes sponsor equity of ~50% and 5x leverage, a 10x forward EBITDA multiple would imply a $37.00 private market value to PPDI shares. We estimate that a similar multiple of 10x EBITDA would translate into high‐teens annualized returns for the sponsor."

The firm currently forecasts earnings of $1.60/share for 2011 and $1.95/share for 2012.

For more ratings news on Pharmaceutical Product Development click here and for the rating history of Pharmaceutical Product Development click here.

Shares of Pharmaceutical Product Development closed at $27.86 yesterday.

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