On Thursday, Baird updated its stock price target for Patterson Companies (NASDAQ:PDCO) shares to $31.00, up from the previous $25.00, while maintaining a Neutral rating on the stock.
The stock currently trades at $31.40, near its 52-week high. This adjustment follows the announcement that Patterson Companies has entered into a definitive agreement to be acquired by Patient Square Capital. InvestingPro analysis shows the company's shares are currently trading at Fair Value levels.
The acquisition agreement stipulates a purchase price of $31.35 in cash for each Patterson share. When factoring in the refinancing of Patterson's receivables, the total deal value is approximately $4.1 billion.
Based on InvestingPro data, Patterson's current EBITDA stands at $333.14 million, with the deal valuation equivalent to just over 12 times trailing twelve months (TTM) EBITDA, surpassing the speculated range of 10-11 times EBITDA that Baird suggested in their second fiscal quarter recap note last week.
The analyst from Baird noted that the deal's valuation felt "about right" for Patterson in any potential private equity or financial transaction. Despite the inclusion of a 40-day go-shop period in the agreement, which allows Patterson to seek alternative offers, Baird expressed skepticism regarding the likelihood of a significantly higher bid materializing.
The reiteration of the Neutral rating by Baird comes in the wake of this acquisition news, with the firm's analyst not foreseeing a more attractive offer to compete with the agreed terms between Patterson Companies and Patient Square Capital. Patterson Companies' shareholders are now presented with a clear cash offer that values the company above recent expectations.
In other recent news, Patterson Companies has been the subject of several major developments. The company has agreed to a $4.1 billion acquisition deal by Patient Square Capital, a healthcare investment firm. This all-cash transaction values Patterson Companies at $31.35 per share. The transaction is expected to be completed in Patterson's fiscal fourth quarter of 2025.
In response to this news, Mizuho (NYSE:MFG) Securities raised its price target for Patterson Companies to $31, while maintaining a neutral rating. Leerink Partners, on the other hand, downgraded the company's stock from Outperform to Market Perform, while Jefferies maintained a Hold rating.
Piper Sandler adjusted its price target for Patterson Companies to $24, with the company's revised earnings guidance midpoint now standing at $2.30 per share. Following the acquisition's completion, Patterson Companies will operate as a privately held entity. These recent developments indicate a significant shift in Patterson Companies' business landscape.
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