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Why Are Medivation Shares Trading Sharply Above The $52.50 Offer?

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Medivation, Inc. NASDAQ:MDVN, Sanofi NYSE:SNY - Why Are Medivation Shares Trading Sharply Above The $52.50 Offer?

But with shares last trading around $56.30, and despite the stock's more than 50 percent rally since we first heard of takeover chatter in early March, Medivation investors are clearly asking for more from a potential suitor.

So why is the stock trading about $4 over the confirmed bid? Taking a look around the sell-side sentiment Wednesday paints a pretty obvious picture.

  • Citi's Yigal Nochomovitz speculated, "With the process taking a hostile turn, other bids are expected to emerge for Medivation."
  • Goldman's Salveen Richter suggested a price for Medivation could near $70 per share.
  • SunTrust's Peter Lawson highlighted a potential takeover value at $62 per share.
  • Credit Suisse analyst Kennen MacKay, in a note from Wednesday, highlighted the Sanofi bid came in "at the low end of our prediction."

It should be noted that amid the apparently bullish comments, analyst recommendations on Medivation are mixed. While Credit Suisse and SunTrust have the equivalent of Buy ratings on the name, both Citi and Goldman Sachs maintain their equivalents of a Neutral rating.

Leerink analyst Geoffrey Porges, in a note from April 25, offered several other possible suitors of Medivation and its promising Xtandi drug.

"We see AstraZeneca and AbbVie as being best positioned to prevail in an auction. Sanofi can probably pay $2-3 less than AbbVie, assuming it values the company's revenue and earnings outlook roughly equally. We do not expect Gilead to prevail in this auction due to tax reasons," according to Porges.

DateFirmActionFromTo
Apr 2016JP MorganTerminatesOverweight
Apr 2016BMO CapitalInitiates Coverage onMarket Perform
Apr 2016SunTrust Robinson HumphreyInitiates Coverage onBuy

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