Canaccord Genuity Remains Bullish on Heartware (HTWR) Following Agreement to Acquire Valtech Cardio
Canaccord Genuity maintained a Buy rating and $106.00 price target on Heartware Int'l (NASDAQ: HTWR) following the company's agreement to acquire privately held Valtech Cardio. Analyst Jason Mills said that this is the type of deal to which investors commonly overreact; but once the dust settles, he would be a buyer of this stock.
Mills commented, "HeartWare’s agreement to acquire privately held Valtech Cardio is the type of deal to which investors commonly overreact; but once the dust settles, we would be buyers of this stock. We like that HTWR is playing offense instead of defense – going after unique growth potential, rather than waiting, hoping a white knight sees that quality in HeartWare. Our experience covering med-tech for 16 years suggests companies playing offense – in the right growth areas – tend to win over time. Importantly, mitral valve disease is one of the most prominent, remaining frontiers in med-tech. We estimate functional mitral regurgitation (fMR) alone will represent a $7B annual TAM in the US by 2020E and ~$14 worldwide, and Valtech’s comprehensive mitral product portfolio addresses not only fMR but degenerative MR and tricuspid valve disease as well. Regarding synergies between HTWR’s end-stage HF-focused VAD franchise and Valtech’s mitral suite, we think the huge potential reward is worth the risk. To wit, MV disease exacerbates patients’ heart failure, ultimately driving them into end-stage disease (and HTWR’s VAD solutions). And, these fMR patients are managed by the same clinicians who may eventually make the VAD referral."
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Shares of Heartware Int'l closed at $81.81 yesterday.