Another year, and another certainty that some companies, especially small and mid-cap, are going to be targets for mergers and acquisitions. The reasons are usually the same: Bigger large cap giants are always looking for ways to improve growth and add to the products or capabilities each corporation has. One of the best ways to increase growth is to purchase smaller companies that have solid product lines, make money and offer products or services that can complement current capabilities.
Each year, the analysts at RBC come out with a detailed list of smaller companies they feel are targets for acquisitions. While they scatter-shoot a broad range of companies, they are generally successful in finding targets that are hit. Of the 535 companies they listed as potential targets last year, 29 were eventually acquired, of a 5.4% success rate.
We screened the health care candidates and found four that look extremely attractive.
This company may be a very solid fit for a big devices player. Haemonetics Corp. (NYSE: HAE) is a health care company that provides products for processing, handling and analysis of blood. The company operates through five segments: North America Plasma; America’s Blood Center and Hospital; Europe, Middle East and Africa; Asia Pacific; and Japan.
It offers plasma collection and storage products, including PCS brand plasma collection equipment and disposables, plasma collection containers, and intravenous solutions, as well as information technology platforms for plasma customers to manage their donors, operations and supply chain.
The company reported adjusted earnings for the third quarter of fiscal 2017 that beating the consensus estimate, though they declined 10% from the year-ago number. Haemonetics posted net income of more than $15 million compared with the year-ago quarter’s net loss of more than $59 million.
The Wall Street consensus price target for the shares is $39.57. The stock closed most recently at $38.60 per share.
This company made the RBC list last year and remains a solid candidate. Luminex Corp. (NASDAQ: LMNX) is transforming global health care and life-science research through the development, manufacturing and marketing of proprietary instruments and assays utilizing xMAP open-architecture multi-analyte platform, MultiCode real-time polymerase chain reaction (PCR), and multiplex PCR-based technologies that deliver cost-effective rapid results to clinicians and researchers.
Luminex’s technology is commercially available worldwide and in use in leading clinical laboratories, as well as major pharmaceutical, diagnostic, biotechnology and life science companies. Luminex is meeting the needs of customers in markets as diverse as clinical diagnostics, pharmaceutical drug discovery, biomedical research including genomic and proteomic research, personalized medicine, biodefense research and food safety.
The listed consensus price target for the stock is $21.17, and the shares closed trading on Wednesday at $18.74 apiece.
This has been a popular name when it comes to potential merger or takeover chatter for years, and it has made the RBC list the past two years. NuVasive Inc. (NASDAQ: NUVA) is a world leader in minimally invasive, procedurally integrated spine solutions. From complex spinal deformity to degenerative spinal conditions, NuVasive is transforming spine surgery with innovative technologies designed to deliver reproducible and clinically proven surgical outcomes.
The company’s highly differentiated, procedurally integrated solutions include access instruments, implantable hardware and software systems for surgical planning and reconciliation technology that centers on achieving the global alignment of the spine. NuVasive has an approximately 2,300-person workforce in more than 40 countries around the world.
The consensus price target for the shares is $79.86. The stock closed on Wednesday at $75.68.
This company has also made the RBC list over the years and remains a very solid candidate. Omnicell Inc. (NASDAQ: OMCL) is a leader in medication and supply dispensing automation, central pharmacy automation, IV robotics, analytics software and medication adherence and packaging systems. Omnicell is focused on improving care across the entire health care continuum, from the acute care hospital setting to post-acute skilled nursing and long-term care facilities to the patient’s home.
Over 4,000 customers worldwide use Omnicell automation and analytics solutions to increase operational efficiency, reduce medication errors, deliver actionable intelligence and improve patient safety. Omnicell’s innovative medication adherence solutions, used by over 32,000 institutional and retail pharmacies in North America and the United Kingdom, are designed to improve patient adherence to prescriptions, helping to reduce costly hospital readmissions.
The consensus price target is set at $43.57. The shares closed the day on Wednesday at $38.25.
While there is absolutely no guarantee that these companies are acquired, they all are outstanding stocks to own in aggressive growth portfolios on their own. The takeout factor just gives them another reason to be considered.