On Thursday, Mizuho (NYSE:MFG) Securities updated its outlook on Patterson Companies (NASDAQ:PDCO), raising the price target to $31.00 from the previous target of $24.00, while keeping a Neutral rating on the stock.
The company, which boasts a market capitalization of $2.77 billion and maintains an impressive 15-year streak of consistent dividend payments, received this adjustment following the announcement that it was considering strategic alternatives in the wake of lower-than-expected earnings and a cut in guidance.
According to InvestingPro analysis, Patterson Companies maintains a GREAT financial health score, despite recent challenges.
Less than a week after the initial announcement, Patterson Companies has entered into an agreement to be acquired by Patient Square Capital. The deal, an all-cash transaction, values the company at $31.35 per share, which is a 35% premium over Wednesday's closing price of $23.00. The stock is now trading near its 52-week high, with InvestingPro data indicating overbought conditions based on technical indicators.
The agreed acquisition price translates to various valuation metrics, as calculated by the analyst at Mizuho. It represents an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) of roughly 9 times based on forward twelve-month estimates. Additionally, the price is equivalent to 10 times EBITDA on a trailing basis and 14 times price-to-earnings (P/E) on forward twelve-month estimates.
These multiples are slightly higher than Patterson Companies' five-year historical average valuations, which have been 9.5 times EBITDA and 13.1 times P/E according to Bloomberg data.
The transaction is anticipated to be completed in Patterson's fiscal fourth quarter of 2025, as per the press release.
In other recent news, Patterson Companies has been in the spotlight due to a series of significant developments. The company has agreed to a $4.1 billion acquisition deal by Patient Square Capital, a healthcare investment firm.
As part of the agreement, Patterson Companies' shareholders will receive $31.35 per share in cash, a figure now aligned with updated price targets by analysts from Jefferies and Leerink Partners. Leerink Partners has downgraded the company's stock from Outperform to Market Perform following the acquisition announcement, while Jefferies has maintained a Hold rating.
Piper Sandler, however, has adjusted its price target for Patterson Companies to $24.00 from the previous $26.00, maintaining a Neutral stance. The firm's revised earnings guidance midpoint now stands at $2.30 per share. Patterson Companies' mixed operating results and market dynamics have been factors in this undervaluation, as per Leerink Partners' analysis.
The acquisition by Patient Square Capital marks a significant shift for Patterson Companies, which has faced challenges in delivering consistent results. The deal is expected to close upon the satisfaction of customary closing conditions and approvals. Following the acquisition's completion, Patterson Companies will operate as a privately held entity.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.