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Quidel Upgraded to Overweight by Piper Jaffray on Strength of Revised Alere Asset Acquisition

NEW YORK (GenomeWeb) – Investment bank Piper Jaffray today upgraded the stock of Quidel to Overweight after the company said it had amended its previously announced acquisition of Alere's Triage B-type naturietic peptide assay business, an adjustment viewed as favorable to Quidel by several investment analysts.

The amended deal provides Quidel with direct commercial responsibility for the assays run on Beckman Coulter analyzers.

Under the original terms of the deal announced in July, Quidel would purchase the Triage BNP assay business, along with Triage's facility and associated real estate in San Diego. The deal also included Alere's MeterPro cardiovascular and toxicology assets, with Quidel having rights to sell the BNP assays and MeterPro products through its direct sales force and distributors.

As a result of the amended terms — which still includes the Triage facility and associated real estate in San Diego — the purchase of Alere's BNP business and the MeterPro business is now estimated at $680 million, including $400 million for the Triage business, $40 million in contingent consideration, and $240 million in deferred consideration for the BNP business, Quidel said. The original purchase price was estimated at $440 million.

In a note to investors, Piper Jaffray analyst William Quirk said he anticipates Quidel's shares will continue to rise as investors continue to assess how accretive the updated terms of the deal are to the company. He raised his estimate of Quidel's 2018 EPS by 64 percent, and is modeling 41 percent growth in its 2019 EPS. Piper Jaffray also raised its price target for Quidel's stock to $50 from $35.

At Cannacord Genuity, analyst Mark Massaro reiterated his Buy rating for Quidel and raised the price target for the company's shares to $48 from $42. "We are more bullish on Quidel shares than we've ever been," he wrote in a note to investors.

Cannacord is not changing its revenue or EPS estimates for Quidel until the deal closes around mid-October. However, the bank did amend its estimates for 2018 pro-forma accretion following the deal to $1.80 per share from the $.85 per share it was estimating before the amended terms of the asset acquisition were announced.

Raymond James, which reiterated its Outperform rating for Quidel, also raised its price target to $47 from $41.

"We believe an already attractive acquisition just got better based on the revised terms, with Quidel now taking over global commercialization of BNP, which significantly adds to the profitability of the combined enterprise at a multiple that we view as quite attractive," wrote analyst Nicholas Jansen in a note to investors. "With the deal becoming increasingly likely now to close based on the revised structure, we see momentum likely building for shares as estimates push higher and continue to view the combined entity as worthy of a multiple well above that of standalone Quidel."

Quidel's shares rose nearly 11 percent to $45.31 in Tuesday morning trading on the Nasdaq.