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Monday, Mizuho (NYSE:MFG) Securities adjusted its stance on Intra-Cellular Therapies (NASDAQ:ITCI) stock, downgrading it from Outperform to Neutral and revising the price target to $132 from the previous $140. The change comes after the company’s fourth-quarter results were released last Friday and in light of the proposed acquisition of Intra-Cellular Therapies, valued at approximately $15 billion. The stock, currently trading near its 52-week high of $128.77, has delivered an impressive 83.3% return over the past year, according to InvestingPro data.
The downgrade reflects Mizuho’s analysis of the acquisition terms announced last month. Mizuho provided a detailed report which included information on the sale process of Intra-Cellular Therapies, potential regulatory and antitrust issues due to therapeutic area overlaps, and an analysis of the U.S. antidepressant and antipsychotic markets where the overlaps are most significant. The company maintains strong financial health with a current ratio of 6.36 and has demonstrated robust revenue growth of 46.62% in the last twelve months.
Despite the potential concerns, Mizuho sees no substantial reasons for the acquisition to be blocked, citing recent similar transactions as precedent. They also noted that the emergence of another bidder at this stage is unlikely. The firm anticipates that the acquisition will proceed as planned, with a projected closure in either the second quarter of 2025, as indicated by Johnson & Johnson (JNJ), or later within the same year.
The report also touched upon the possibility of other interested parties, but deemed it unlikely to affect the current proposed terms of the deal. Mizuho’s analysts expect the transaction to be finalized without significant hurdles, aligning with the guidance provided by the acquiring company.
In other recent news, Intra-Cellular Therapies has been a focal point due to its acquisition by Johnson & Johnson for approximately $14.6 billion, equating to $132 per share. This transaction is anticipated to close in the first half of 2025, pending regulatory approval. Canaccord Genuity, RBC Capital Markets, and Piper Sandler have all downgraded Intra-Cellular’s stock ratings following the acquisition announcement, while aligning their price targets with the acquisition price of $132. Analysts have noted the strategic fit of Intra-Cellular’s lead drug, Caplyta, within Johnson & Johnson’s existing neuropsychiatry portfolio. Caplyta, currently approved for bipolar depression and schizophrenia, may soon expand its label to include major depressive disorder, potentially boosting its market presence. Meanwhile, Johnson & Johnson’s ’AAA’ credit rating is under review by S&P Global Ratings, following the acquisition, due to expected increases in the company’s leverage. Despite this, projections indicate that Johnson & Johnson will reduce its leverage below the critical threshold by the end of 2026. Additionally, RBC Capital Markets has highlighted potential risks to biotech stocks, including Intra-Cellular Therapies, due to recent leadership changes at the FDA.
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