An Australian investment firm is reportedly suggesting Pacific Edge could be in line for a takeover bid.
Last year, Bell Potter helped raise more than $100million for the Dunedin cancer diagnostic company in an oversubscribed capital raise when it listed on the ASX.
Yesterday, BusinessDesk reported Bell Potter had issued a "speculative" buy recommendation this week, valuing Pacific Edge at $A1.10 ($NZ1.19) a share.
That is 18 % higher than Wednesday’s ASX price of A93c and 20% above its NZX price of 99c yesterday.
Since hitting a high last year, its NZX share price has dropped from $1.56 a share to a low of 88c.
Bell Potter analyst Anubhav Saxena based the buy recommendation on Pacific Edge’s prospects in the important US market, where it has entered into a commercial agreement with Kaiser Permanente as well as coverage by the Centres for Medicare and Medicaid Services (CMS).
Pacific Edge, which now had 28 employees across its US operations, saw that as a potential $US1.2billion ($NZ1.73billion) market, with five million tests possible annually, Mr Saxena said.
There had been significant growth and merger and acquisition activity in the global molecular diagnostics market over the past year to 18 months, he said.
Pacific Edge’s significant invested capital in the Cxbladder system, its "large base" of clinical validation data and superior test characteristics would make it an attractive acquisition candidate.
Its footprint across "key geographical segments" would also contribute to its acquisition potential, Mr Saxena said.
Craigs Investment Partners investment adviser Peter McIntyre, of Dunedin, said it was "very possible" a company was looking at Pacific Edge.
Any company on the NZX50 that had a strong balance sheet and a reasonable outlook for growth became a target for a takeover, he said.
"It is feasible at the end of the day, but it is pure speculation in some regard as well."
The mean price target by analysts covering the stock in New Zealand was about $NZ1.13 a share.
Investors would be looking at Pacific Edge’s revenue growth when it next reported its financial results, Mr McIntyre said.
When contacted, Pacific Edge chief executive Dr Peter Meintjes said the company "does not comment on speculation".
Dr Meintjes recently told its investors the "sharp shift" in global sharemarket sentiment had affected Pacific Edge’s share price.
The company’s executive team and board believed Pacific Edge had to focus its efforts on what it could control, he said.
That was building long-term sustainable value in a rapidly growing business and making "prudent use" of the capital investors had trusted Pacific Edge with, Dr Meintjes said.
