Intercept Pharmaceuticals (ICPT) Stock Climbs On Acquisition Rumors


Intercept Pharmaceuticals Inc (NASDAQ: ICPT)

Intercept Pharmaceuticals had an incredible day in the market on Friday, and for a very good reason. Rumors started to surface that the company is considering selling itself. Today, we’ll talk about the rumors, how the market reacted to the news, and what we can expect to see from ICPT moving forward. So, let’s get right to it!

ICPT Considering Being Acquired

As mentioned above, yesterday was a great day for ICPT after rumors started to surface that the company is considering selling itself. The rumors were first announced by Reuters. According to the release, the biopharmaceutical company that’s specifically focused on developing and commercializing treatments for chronic liver diseases has been approached by multiple other companies with regard to a sale. The report also stated that the company has consulted investment bankers and continues to consider making a deal.

How The Market Reacted To The News

As investors, we’ve learned that any time there’s positive news released with regard to a publicly traded company, we can expect to see gains in the value of the stock. Also, there are few pieces of news that have the ability to send a stock soaring quite like acquisitions. So naturally, ICPT climbed in a big way on Friday as the rumors surfaced. By the end of the trading session, ICPT was trading at $120.22 per share after a gain of $25.93 per share or 27.50%.

How Likely Is An Acquisition?

There have been several points at which we’ve seen acquisition rumors send a stock soaring, only to find out that the idea of an acquisition was either just a rumor or the deal fell through. Ultimately, most of these rumors end with the stock tanking from the high levels it climbed to. With that said, how likely is an acquisition of Intercept Pharmaceuticals? In my opinion, an acquisition isn’t very likely at all, and there is about a 0.01% chance that it will happen soon, if it does happen at all.

On April 7th, ICPT is scheduled for a meeting with the FDA at which the company’s obeticholic acid oral tablets will be reviewed for treatment of primary biliary cirrhosis. This leads into why I don’t believe an acquisition is very likely.  If things go well at the FDA meeting, the value of ICPT will likely climb in a big way, hindering the deal, and likely making Intercept think twice. If the FDA meeting doesn’t go well, it will have an adverse effect on the value of the company, which is also likely to hinder the deal. With all of that said, I simply don’t see an acquisition happening, at least not in the first half of the year.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from ICPT. First and foremost, I don’t believe the acquisition is going to happen. So, I’m expecting a correction in the stock, bringing it back to a reasonable rate for trading. However, in the long run, I believe that the company will grow. Ultimately, Intercept is a great company with incredible products and a drive for innovation. All in all, I’m expecting to see positivity.

What Do You Think?

Where do you think ICPT is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]


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