UPDATE: Stifel Upgrades Salix Pharmaceuticals Based on SNTS Deal Accretion

In a report published Tuesday, Stifel analyst Annabel Samimy upgraded the rating on Salix Pharmaceuticals Ltd. (NASDAQ: SLXP) from Hold to Buy, and named a $108.00 price target.

In the report, Stifel noted, “Following a thorough strategic/financial analysis of SLXP's $2.6bn acquisition of SNTS, we are upgrading SLXP to Buy with a $108 target price and believe the deal has several important merits. Strategically, SNTS brings Uceris's IBD franchise complementaries, under which SLXP's GI infrastructure could be maximized ($500mn+). Additionally, SLXP acquires a profitable PCP sales force to both leverage current products and prepare for IBS-D's potential 2014 launch. Importantly, after formally combining the models, we view the deal as even more accretive than initial pro forma calculations, approaching $1.00 in 2014 and as high as $2.00 in 2015, declining thereafter (model changes below). We view this diversifying deal very favorably, and despite a stock move of 15%+ following announcement, we believe there is more realizable value.”

Salix Pharmaceuticals Ltd. closed on Monday at $84.80.