Wedbush Downgrades Pharmacyclics (PCYC) to Neutral; Potential Takeover Mostly Priced In

Wedbush downgraded Pharmacyclics (NASDAQ: PCYC) from Outperform to Neutral with a price target of $234.00 (from $225.00) on the expectation that an acquisition of PCYC is likely to occur in the near future.

Analyst David Nierengarten commented, "Third-party reports indicated last week that PCYC has put itself up for sale, with interested suitors reported to include J&J and Novartis. Our valuation is based on the expected value of the Imbruvica asset through the remainder of its patent life. We arrive at our revised PT by discounting (15%) the forecasted operating cash flows through 2026, after applying a 40% cut to expenses to account for expected synergies. We then add PCYC's cash/share ($841M, 80.2M shares) and the $220M in remaining milestones it is still eligible to receive from J&J."

With shares of PCYC largely reflecting the firm's forecasted acquisition price they downgrade to Neutral.

For an analyst ratings summary and ratings history on Pharmacyclics click here. For more ratings news on Pharmacyclics click here.

Shares of Pharmacyclics closed at $221.29 yesterday.

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