Shares of biopharma company Intra-Cellular Therapies (ITCI) rallied almost 36% in Monday’s pre-market trading on news of its acquisition by healthcare giant Johnson & Johnson (JNJ) at $132 per share, bringing the deal value to $14.6 billion. The news of a potential acquisition was initially reported by Bloomberg on Sunday. The deal price represents a 39% premium to ITCI stock’s closing price on Friday.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
It is worth noting that on Friday, Intra-Cellular Therapies stock rose about 15% on news that the company reached a settlement agreement with Sandoz (SDZNY) to resolve patent litigation related to Caplyta, its bipolar depression drug.
Rationale Behind JNJ’s Potential Acquisition of Intra-Cellular
Intra-Cellular is a biotech company that leverages the intracellular approach to develop innovative treatments for people living with complex psychiatric and neurologic diseases. Notably, the company’s Caplyta medication is the first and the only U.S. FDA-approved treatment for bipolar I and II depression as an adjunctive and monotherapy. It is also approved for the treatment of schizophrenia in adults. Caplyta is expected to enhance JNJ’s topline with over $5 billion in estimated peak-year sales.
Through this acquisition, JNJ further expands into the high-growth therapeutic area of neuroscience, bolstering the pharma division’s prospects. This acquisition could also help the company offset the expected decline in revenues due to patent expirations of key drugs. Interestingly, in May 2024, JNJ completed the acquisition of heart device company Shockwave Medical for $13.1 billion.
The news comes amid renewed deal activity in the healthcare space. Recently, medical device maker Stryker (SYK) announced the acquisition of Inari Medical (NARI) for $4.9 billion.
Is JNJ a Good Stock to Buy?
Wall Street is cautiously optimistic on JNJ stock, with a Moderate Buy consensus rating based on four Buys and 11 Holds. The average JNJ stock price target of $170 implies about 20% upside potential. Shares have declined more than 12% over the past year.
Is Intra-Cellular Therapies Stock a Buy, Sell, or Hold?
Wall Street has a Strong Buy consensus rating on Intra-Cellular Therapies stock, with a Strong Buy consensus rating based on 11 Buys versus two Holds. The average ITCI stock price target of $103.58 implies 9.2% upside potential. Shares have rallied over 40% in the past year.
