10 Health Care Stocks Seen Jumping on Takeovers

Mergers and acquisitions have been proceeding at a torrid pace, and the health care sector may be an especially active area for future consolidation. In the first half of 2018, the value of M&A deals hit all-time records both worldwide and in the U.S., up by 64% and 79%, respectively, from the first half of 2017, per data from Thomson Reuters cited by Axios.com. The number of deals were down by 10% and 13%, respectively, but their average values soared. Meanwhile, despite a recent slowdown in health care M&A, this sector has a history of being among the most active when it comes to business combinations, according to Business Insider. Per Business Insider, these are the top 10 takeover candidates that Morgan Stanley sees in the health care sector: IQVIA Holdings Inc. (IQV), BioMarin Pharmaceutical Inc. (BMRN), Seattle Genetics Inc. (SGEN), DaVita Inc. (DVA), Universal Health Services Inc. (UHS), Dexcom Inc. (DXCM), Neurocrine Biosciences Inc. (NBIX), Perrigo Co. PLC (PRGO), Nektar Therapeutics (NKTR), and Sarepta Therapeutics Inc. (SRPT). The table below lists their current market capitalizations. Morgan Stanley uses a proprietary quantitative model that predicts which companies are the most likely to receive tender offers during the next 12 months, excluding stocks for which takeover rumors are already circulating. As the table indicates, the market caps of Morgan Stanley's 10 stocks range from $9 billion to $25 billion, with 8 of the 10 at $12 billion or less, making them easily digestible by the biggest players in the industry.