Medtech stock Edwards Lifesciences broke out in high volume Monday on a rumor that Dow Jones component Johnson & Johnson could be interested in buying it.
A report from Barron’s suggests that J&J could acquire medical technology players Edwards or Boston Scientific. Both have extensive portfolios in heart and cardiovascular devices, and compete against Abbott Laboratories and Medtronic.
Spokespeople for J&J didn’t immediately a return request for comment. A spokeswoman for Boston Scientific declined to comment on “market rumor and speculation,” in an email to Investor’s Business Daily. An Edwards spokeswoman noted the firm “does not comment on speculation involving mergers or acquisitions.”
On the stock market today, Edwards stock popped 7.7%, to 165.47. Shares broke out of a cup formation with a buy point at 156.97. Boston Scientific stock rose 1.7%, to 38.40. J&J stock, on the other hand, dipped 1.7%, to 140.47.
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Medtech Stocks Soar
Medtech stocks have reached multidecade highs this year. Medical systems and equipment stocks are ranked ninth out of 197 groups tracked by IBD. The medical products group — which includes Edwards, Boston and Medtronic — is ranked sixth.
Merger fervor has also helped to send medtech stocks skyward. This isn’t the first time J&J has been a suggested acquirer for Boston. Earlier in the summer, rumors emerged that Stryker and J&J could go to the mat to acquire Boston.
Instead, Stryker announced two tuck-in acquisitions in August and September for K2M Group Holdings and Invuity. Also, last week, Medtronic said it would pay $1.34 billion to buy the remaining shares of medtech stock Mazor Robotics that it doesn’t already own.
J&J has been active in making acquisitions this year. So far in 2018, the medtech giant has announced plans to acquire five companies. Acquiring Edwards or Boston would take a good amount of cash. Edwards is worth around $34 billion. Boston’s value is north of $52 billion.
Medtech Stock Benefits From Strong Cardiovascular Studies
Also helping Edwards on Monday, Abbott announced positive results from a study of its MitraClip device in patients with leaky heart valves. The study showed that using the MitraClip plus traditional medical therapy in these patients is superior to medical therapy alone.
That could benefit Edwards, which also makes mitral valve repair devices. Previously, patients with primary mitral regurgitation could receive MitraClip. But it was unproven that patients with the harder-to-treat form, known as functional, would benefit from surgery.
Boston also unveiled strong results from a study of its drug-eluting stent known as Eluvia. Its device outperformed a rival from privately held Cook Medical in patients with an arterial disease.
Date: October 1, 2018
Source: Investors Business Daily
