Heartware International's (HTWR) Valtech Cardio Acquisition Doesn't Make Sense, Says Northland
Northland Capital Markets maintained an Underperform rating on Heartware International (NASDAQ: HTWR) with a price target of $60. Analyst Suraj Kalia said the company's acquisition of Valtech Cardio does not makes sense.
Kalia explained, "Valtech is a pre-revenue company developing surgical & transcatheter mitral repair / replacement products. The astronomical multiple for this asset with no obvious complementarity, different call points, different domain expertise, and different sets of challenges makes us question the strategic rationale for this deal, especially given most of Valtech programs are preclinical in nature."
"The debate over repair vs. replacement on the mitral side is far from over, hence to pay $450M for essentially a mitral repair asset is interesting, in our view. We wonder what Heartware saw in this asset that an Edwards, St, Jude, Abbott and Medtronic did not. The debate on functional MR being a vascular or ventricular problem is far from settled. Late ventricular enlargement negates any post-op mitral repair benefits. Moreover, all the recent bets in the mitral space have been in mitral replacement," added the analyst.
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Shares of Heartware Int'l closed at $81.81 yesterday.