Weekly Mid-Cap Update: Medivation Rose, Rejected Sanofi’s Offer
Weekly Update: April's Final Week Saw Biotechnology Stocks Plunge
Reviewing mid-caps
The mid-cap stocks of biotechnology (or biotech) ETFs underperformed the SPDR S&P 500 ETF (SPY), which fell by 1.3%, in the week ended April 29, 2016.
The mid-cap stocks of the iShares Nasdaq Biotechnology ETF (IBB) fell by 6.2%, while the mid-cap stocks of the Health Care Select Sector SPDR ETF (XLV), the SPDR S&P Biotech ETF (XBI), and the iShares US Medical Devices ETF (IHI) fell by 6.6%, 6.5%, and 2.2%, respectively.
The above graph reflects the performances of the mid-cap stocks of different biotech ETFs in comparison with SPY for the week ended April 29, 2016.
Medivation stock zooms up
Among the mid-cap stocks, only a few rose during the week ended April 29, 2016. These included Integra Lifesciences (IART) and IDEXX Laboratories (IDXX), which rose by 6.6% and 4%, respectively.
However, the biggest mid-cap rise was seen by Medivation (MDVN). MDVN rose as it rejected a hostile takeover bid from Sanofi (SNY). In a press release, Medivation “announced that its Board of Directors, after consultation with its financial and legal advisors, unanimously determined that the unsolicited proposal from Sanofi to acquire Medivation for $52.50 per share in cash substantially undervalues Medivation and is not in the best interests of the company and its stockholders.”
Medivation closed at $57.8 for the week ended April 29, 2016, and it was trading above its 20-day moving average. Year-to-date (or YTD), the stock has risen by 19.6%. However, its relative strength index (or RSI) is at 74, indicating that it has temporarily moved into an overbought situation.
The stock has a 2016 forward price-to-earnings (or PE) multiple of 45.3x. Medivation has a book value of $5.32 per share, and with its current price, it’s trading at a price-to-book value of ~10.9x. Medivation has a weight of ~1% in IBB and 1.6% in XBI.
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