BTIG Research Upgrades Alere To Buy, Says 10-K Filing Offers 'Fundamental Opportunity'

Alere Inc’s (NYSE: ALR) 10K offered financial clarity, alleviating concerns related to gaps in the company’s current model, BTIG Research’s Dane Leone said in a report. He upgraded the rating on the company from Neutral to Buy, while establishing a new price target of $48.

Fundamental Opportunity

The 10K and added disclosures for 2015 provide greater confidence in the current forecasts for 2016 and 2017, analyst Dane Leone mentioned.

Alere’s shares are trading at an excessive discount to the peer group. Although the company’s revenue growth would likely not reaccelerate until 2017, “the remaining margin opportunity is enough to warrant nothing more than a -1.5x discount to the peer group,” Leone stated.

He added that Alere’s shares were trading at a discount to the price of $56 per share stated in the merger agreement with Abbott Laboratories (NYSE: ABT) [Rated: Buy, PT: $45) and “we think that it is time to move from the sidelines.”

Merger Agreement

In April 2016, Abbott seemed keen on breaking the merger agreement and would have used “anything available” in an attempt to change the deal. “Nothing within the 10k has created additional concerns regarding the merger agreement,” the analyst noted. He further mentioned that even if Abbott’s stance remained hostile, the divestitures undertaken by Alere would “appease regulatory concerns.”

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