(BFW) Pfizer May Return for Astra, Which May Target Actelion: Citi

Pfizer May Return for Astra, Which May Target Actelion: Citi
2014-07-29 07:13:51.858 GMT


By Allison Connolly
July 29 (Bloomberg) -- Astra is still most attractive
target for Pfizer while Astra may pursue near-term acquisitions
such as Actelion, Citi says in note today.
* 25% chance of Pfizer returning for Astra after Aug. 26; will
need to offer at least >$60 to secure deal
* Still sees Dec. approach more likely and assumes
inversion window remains open for up to 18 months
* Sees asset swaps or JV around oncology business unlikely
to deter Pfizer
* Citi says Astra will pursue more near-term EPS accretive
deals, including potentially Actelion, to boost EPS, div.
cover
* A potential Actelion acquisition at ~$16b (25% premium)
could be up to 11% accretive to 2017 trough EPS; would
broaden core respiratory portfolio, improve div. cover
* Astra has ample financing given its current ~$3b-4b net
debt
* Maintains buy rating for Astra; lifts target price to 5,400p
vs 4,900p
* NOTE: Astra reports 2Q results on July 31 at 7am U.K.


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To contact the reporter on this story:
Allison Connolly in London at +44-20-3525-7043 or
aconnolly4@bloomberg.net
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jludden@bloomberg.net
Gaurav Panchal

>>> US Close Dow+0,13% S&P+0,03% Nasdaq-0,11%

Closing Market Summary: Stocks Begin Trading Week on Unassuming Note

The stock market began the last week of July on a quiet note with the S&P 500 ending less than a point above its flat line. Like the benchmark index, the Dow Jones Industrial Average (+0.1%) also posted a slim gain, while the Russell 2000 (-0.5%) and Nasdaq Composite (-0.1%) lagged throughout the session.

The major averages were awakened from their weekend slumber with an opening retreat that pressured the S&P 500 below its 20-day moving average (1975). Even though the index dipped early, only two sectors—consumer staples (-0.5%) and industrials (-0.5%)—displayed noteworthy weakness that persisted into the close.

Meanwhile, most of the remaining sectors kept pace with the broader market and climbed to highs as the afternoon wore on. The consumer discretionary sector (+0.2%) was an early laggard, but ended among the leaders with help from the likes of Netflix (NFLX 424.66, +2.80) and Priceline.com (PCLN 1239.29, +11.51). Furthermore, the sector drew strength from the retail industry, where Family Dollar (FDO 75.74, +15.08) agreed to be acquired by Dollar Tree (DLTR 54.87, +0.65) for $74.50/share, representing a 22.8% premium to Friday's closing price.

M&A activity was also the focus in another influential sector—technology (+0.2%)—with Zillow (Z 160.32, +1.46) acquiring Trulia (TRLA 65.04, +8.69) for $3.50 billion in stock, which represents roughly a 25.3% premium to Friday's closing price.

Elsewhere among tech shares, the largest sector component—Apple (AAPL 99.02, +1.35)—rallied 1.4%, but high-beta chipmakers were not nearly as fortunate. The PHLX Semiconductor Index shed 0.1% after being down as much as 1.3% during the opening hour of action.

Similar to chipmakers, biotech stocks struggled throughout the session, and while their underperformance weighed on the Nasdaq Composite, it had little impact on the health care sector. The iShares Nasdaq Biotechnology ETF (IBB 251.91, -2.15) lost 0.9%, while the health care sector tacked on 0.1%.

Like health care, countercyclical telecom services (+0.5%) and utilities (+1.5%) also finished in the green. Notably, the utilities sector climbed throughout the session to extend its year-to-date advance to 13.3%.

On the fixed income side, the 10-yr note made a brief appearance in the green when equities were on their lows, before sliding to a fresh low ahead of the close. The benchmark note shed four ticks with its yield climbing two basis points to 2.48%.

Participation was below average with less than 580 million shares changing hands at the NYSE.

Economic data was limited to the Pending Home Sales report for June:

* Pending home sales fell 1.1% in June, which was worse than the 0.8% decrease forecast by the Briefing.com consensus 

* The May reading was revised down to 6.0% from 6.1% 

Tomorrow, the Case-Shiller 20-City Index for May (consensus 10.0%) will be released at 9:00 ET, while July Consumer Confidence (consensus 85.6) will cross the wires at 10:00 ET. On the earnings front, BP (BP 50.64, -0.28), Honda Motor (HMC 35.18, +0.19), Pfizer (PFE 30.10, -0.09), and UPS (UPS 102.66, -0.91) will report their results ahead of the opening bell.

* S&P 500 +7.1% YTD  * Nasdaq Composite +6.4% YTD  * Dow Jones Industrial Average +2.5% YTD  * Russell 2000 -2.1% YTD