On Tuesday, Wolfe Research maintained a Peer Perform rating on shares of Silk Road Medical (NASDAQ: NASDAQ:SILK), following the company's significant acquisition news.
Silk Road Medical, a medical device company, has been in the spotlight since Boston Scientific (NYSE: NYSE:BSX) announced its intention to acquire all outstanding shares of SILK at $27.50 each. This offer represents a 27% premium over the stock's previous closing price and values the company at an enterprise value of approximately $1.16 billion.
The proposed acquisition price translates into a forward 2024 enterprise value-to-revenue multiple of 4.7 times. This multiple is slightly higher than the average for a comparative group of small to mid-sized med tech companies, which typically ranges between 3 to 4 times. The acquisition's revenue multiple is modestly below the historical average takeout revenue multiple of 5.4 times, with the most recent average in 2023 being 5.2 times.
The completion of the acquisition is anticipated to occur in the latter half of 2024. However, a new development occurred last Friday when Silk Road Medical announced that Boston Scientific withdrew and refiled its paperwork with the Federal Trade Commission (FTC). This action resets the 30-day waiting period under the Hart-Scott-Rodino Act, which is now expected to expire on September 12th.
The refiling with the FTC raises questions about potential regulatory scrutiny, especially considering that Boston Scientific already has products in its portfolio that overlap with those of Silk Road Medical, including a carotid stent and an embolic protection device. The transaction's progression remains under observation as the new waiting period unfolds.
Apart from the merger news, Silk Road Medical recently held its Annual Meeting of Stockholders, where all eight director nominees were elected to serve until 2025. The advisory vote on executive compensation was approved, and PricewaterhouseCoopers LLP was ratified as the company's independent registered public accounting firm for the year ending December 31, 2024.
Lastly, Silk Road Medical reported a 21% year-over-year increase in Q1 revenue to $48.5 million, despite a net loss of $14.1 million. For the full year 2024, the company's revenue guidance projects revenues between $194 million and $198 million, indicating a year-over-year growth of 10% to 12%.
InvestingPro Insights
As Silk Road Medical (NASDAQ: SILK) enters a critical phase with its acquisition news, investors are closely monitoring the company's financial health and stock performance. According to InvestingPro data, Silk Road Medical boasts a market capitalization of approximately $1.1 billion, underlining the significance of the acquisition offer from Boston Scientific. Despite analysts' concerns, with four having revised their earnings estimates downwards for the upcoming period, the company's liquid assets surpass its short-term obligations, indicating a degree of financial resilience.
InvestingPro Tips suggest that while Silk Road Medical's stock price has been volatile, it has experienced a strong return over the last three months, with a 30.55% gain, and an even more impressive 71.64% uptick over the last six months. This performance is reflected in the stock trading near its 52-week high, at 99.34% of this peak. However, analysts do not expect the company to be profitable this year, and it has been operating without profit over the last twelve months. Furthermore, the stock is trading at a high Price/Book multiple of 7.11, which may warrant caution among value-focused investors.
For a more comprehensive analysis, including additional insights, investors can explore the full range of InvestingPro Tips for Silk Road Medical, available at InvestingPro. There are 10 more tips listed on the platform, providing a deeper dive into the company's performance and expectations.
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