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Investment Bank Cuts Price Target on Gen-Probe Stock

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Investment bank Canaccord Genuity has cut its price target on Gen-Probe's stock to $75 from $88, saying that there appears to be no competitive bids to acquire the molecular diagnostics firm.

News that Gen-Probe was for sale first emerged in late April, after the firm had reportedly hired Morgan Stanley to seek a buyer. Among the potential bidders mentioned at the time were Novartis, Thermo-Fisher Scientific, Danaher, and Life Technologies.

However, on June 6, a report on the website of The Wall Street Journal suggested that the bidding process wasn't going well and Novartis was the only remaining bidder. That news had sent Gen-Probe's shares down nearly 13 percent to $71.41. Since then, its shares have dropped to a close of $65.96 yesterday.

In a note published Monday, Canaccord Genuity Analyst Jeffrey Frelick said that the bank had lowered its price target to $75, "which was our target prior to take-out reports, where we believed the fast-growth molecular diagnostics segment would see companies acquired for 5-7x revenues."

He said the price target is based on a 5.5x price/sales multiple for the bank's 2012 revenue estimate for Gen-Probe, which is at the lower end of the 5-7x peer group multiples for the molecular diagnostics industry.

Canaccord also has a 'Hold' rating on Gen-Probe's stock.

In mid-afternoon trade on the Nasdaq, shares of Gen-Probe were down a fraction of 1 percent at $65.91.

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