Health and Healthcare

4 Well-Known Health Care Stocks Are Potential Buyout Candidates

Lee Jackson

Published: March 18, 2016 10:15 am

Last Updated: January 13, 2020 11:47 am

It happens every year, and 2016 won’t be any different. Larger companies looking to add to growth, in addition to that of the organic or internal variety, scan the field for purchases and acquisitions that are easy to bolt on and could add returns in a timely fashion. This year the process may even speed up some as the market sell-off that happened through the first two months may have already put some companies in the sights of acquirers, despite the recent market rally.

In what is a yearly and very all-encompassing report, the analysts at RBC again go through every sector looking for possible takeover candidates. Last year, the company’s takeover screens yielded 29 candidates that eventually were acquired over the following 12 months.

One screen that should be of interest to many investors is the potential buyout candidates in the health care. With an aging population, and larger companies looking to add new technologies and capabilities, the chances for mergers and acquisitions activity to jump are very real. We found four on the RBC screen that are very well known.

Haemonetics

This company may be a very solid fit for a big devices player. Haemonetics Corp. (NYSE: HAE) is a global health care company dedicated to providing innovative blood management solutions for customers. It devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help customers improve patient care and reduce the cost of health care for blood collectors, hospitals and patients around the world. Its technologies address important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services.

Haemonetics trades at 10 times enterprise value (EV) to EBITDA and posts gross margins of 48%. These are the metrics that the RBC team uses when looking for potential takeover candidates. The company also boasts EBIT margins of 12%. The Thomson/First Call consensus price target for the stock is $36.33. The shares closed Thursday at $33.36.

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