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Stifel, a financial services firm, downgraded shares of Revance Therapeutics (NASDAQ: NASDAQ:RVNC) from Buy to Hold, significantly reducing the price target to $6.66 from the previous $20.00.
This decision comes as Revance Therapeutics announced its plans to merge with Crown Laboratories, a private global skincare company. The offer price of $6.66 per share represents an 89% premium over Revance's last closing price, but it is notably lower than its 52-week high of over $20 per share.
Revance's move to merge with Crown Laboratories comes after what Stifel describes as a "tumultuous launch" for Daxxify, a product of Revance, and a challenging year overall for the company's stock performance.
The merger has been unanimously approved by the board of Revance Therapeutics. The next step involves the tendering of the majority of shares, after which Crown Laboratories will proceed to acquire any remaining shares through a second-step merger. This action would result in Revance becoming a privately owned subsidiary of Crown.
Crown Laboratories announced a definitive merger agreement with Revance Therapeutics in a deal valued at approximately $924 million. This move aligns with Crown's vision to become a fully integrated global aesthetics and skincare company, with Revance's innovative aesthetic products complementing Crown's skincare line. The merger, which has received unanimous approval from Revance's Board of Directors, is expected to close by the end of the year.
Revance Therapeutics reported a 20% year-over-year increase in its total net revenue, reaching $65.4 million in the second quarter of 2024, largely driven by a 65% increase in units sold and a 27% rise in net product revenue in its aesthetics division. The company is on track to achieve its revenue guidance of $280 million for the year and projects positive adjusted EBITDA by 2025.
In addition to the merger, Revance launched DAXXIFY, a new product for cervical dystonia, and expects to generate modest revenue from it in 2024. Despite observing some softness in the aesthetics market, the firm anticipates consistent growth for the RHA product line and sequential growth for DAXXIFY. Revance is also considering international expansion, with potential partnerships in markets such as Australia.
InvestingPro Insights
In line with the recent developments at Revance Therapeutics, InvestingPro data provides additional context to the merger situation. The company has experienced a significant return over the last week, with a 15.36% increase in price total return, which may reflect market reactions to the merger news. Despite this recent uptick, the price has fallen considerably over the past year, with an 81.33% drop in the one-year price total return, underscoring the "tumultuous" period mentioned by Stifel.
InvestingPro Tips suggest caution for investors considering the stock's future. Revance is quickly burning through cash, which may raise concerns about long-term financial sustainability, especially since analysts do not anticipate the company will be profitable this year. However, it's noteworthy that the company's liquid assets exceed its short-term obligations, providing some financial buffer in the near term. For those looking for income investments, it's important to note that Revance does not pay a dividend to shareholders.
For a deeper dive into Revance's financials and more InvestingPro Tips, investors can explore https://www.investing.com/pro/RVNC, which lists an additional six tips for a comprehensive investment analysis.
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