Robert W. Baird reiterates Genzyme at ‘neutral’

Robert W. Baird reiterated its ‘neutral’ rating on shares of biotech company Genzyme Corp. on Tuesday, while increasing its price target to $69 from $61.

“With Sanofi-Aventis’s now public $69 bid to buy Genzyme, we think the possibility of a deal is much higher, despite the seemingly acrimonious nature of discussions to date. Given the premium this offer represents, along with the well-documented challenges this business faces on numerous fronts, we would continue to trim overweight positions back to neutral-weight,” said Christopher Raymond, an analyst at Robert W. Baird.

Genzyme has formally received a $69/share all-cash offer from Sanofi-Aventis. The analyst raised his price target to $69 as he thinks the possibility of a deal is now much higher. At these levels, the analyst continues to recommend trimming overweight positions back to neutral-weight.

With Genzyme’s board already having rebuffed Sanofi-Aventis’s initial offer, this marks the beginning of what the analyst thinks could be a somewhat protracted process. Sanofi-Aventis has acknowledged that it has yet to see Genzyme’s books, so the analyst thinks it is within the realm of possibility that an offer could extend into the mid-$70s.

Although, with Sanofi-Aventis having previously expressed price sensitivity above $70/share, the analyst is hard-pressed to imagine an offer at significantly higher levels in the absence of any new information.