Solta Medical Inc (SLTM), Keryx Biopharmaceuticals (KERX): Two Stocks to Buy on Merger Speculation

Page 1 of 2

Large healthcare companies are facing revenue declines due to expiring patents. These cash rich giants are increasingly investing in small biotechnology companies with promising candidates. Solta Medical Inc (NASDAQ:SLTM) and Keryx Biopharmaceuticals (NASDAQ:KERX) are good targets for Big Pharma players looking to diversify or expand patent portfolios.

Solta Medical Inc (NASDAQ:SLTM)

Solta Medical Inc (NASDAQ:SLTM)’s board is resisting an acquisition but it seems highly likely that activist shareholders will succeed. The shareholders have already rejected the Board’s attempts to double outstanding shares and reduce chances of acquisition. Keryx is getting ready to submit its first NDA next month and there is a high probability that it will get FDA approval for Zerenex.

Medical Equipment

Solta Medical Inc (NASDAQ:SLTM) is involved in design, development and commercialization of energy-based medical appliance and equipment. Its target market expands to Middle East, North America, Europe and Asia Pacific. Solta Medical Inc (NASDAQ:SLTM) brands include Fraxel, Thermage, Liposonix, Isolaz and CLARO. Over the years it has developed its own distribution network but also utilizes independent distributors and retail networks. Solta Medical Inc (NASDAQ:SLTM)’s customers include gynecologists, dermatologists, plastics surgeons and ophthalmologists.

The valuations of Solta Medical Inc (NASDAQ:SLTM) have been pretty stagnant in the last few years. During the last few quarters shares have fluctuated between $2 and $3. While the valuations have remained stagnant, Solta has shown a significant revenue growth. The company revenues have increased from $110 million (2010) to $144 million (2012), growing by nearly 31%. Despite the revenue growth, gross margins have remained stable at around 62%. However, this growth has not been reflected in the bottom-line due to an approximately 100% increase in SG&A expenses to $104 million.

In the recent past Solta has become an attractive acquisition target. The stagnant price and lack of dividends indicate that a profitable acquisition should be the right option. However, the board of Solta has been resisting any such attempts. According to Voce Capital, the company has been actively trying to thwart acquisition attempts by interested parties. In its last week’s letter to the board, Voce has demanded that the board should formulate a special committee to evaluate M&A. The firm has also criticized the board for shareholder dissatisfaction and intentionally refusing good bids for Solta. The board is already low on investor confidence as the shareholders have rejected the Board’s proposal to double the shares outstanding to 200 million.

There are a number of parties interested in Solta Medical. There have been rumors that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is interested in acquiring Solta. The company has already acquired a number of companies in the last year.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!