Markets

Here’s Why Qiagen Skyrocketed Over 43% in November

What happened

Shares of Qiagen (NYSE: QGEN) jumped 43.6% in November, according to data provided by S&P Global Market Intelligence, after the maker of scientific and diagnostic tests said that it was considering a potential sale of the company.

So what

Bloomberg initially reported that Thermo Fisher Scientific (NYSE: TMO) was looking to acquire Qiagen, although it cited unnamed sources, and the companies weren't willing to confirm that they were in talks.

And then a few days later, Qiagen acknowledged that it had received several "indications of interest" to be acquired and was exploring strategic alternatives.

After a rocky third quarter, a transition in the CEO position, and a pivot in next-generation sequencing sent Qiagen down 20% in October, it's not surprising that Thermo Fisher or some other big science and diagnostic outfit might want to swoop in and buy the company's assets on the cheap.

There's certainly been plenty of consolidation in the industry with companies looking to save money on redundancies like sales forces. Thermo Fisher is, of course, the result of the merger of Thermo Electron and Fisher Scientific.

Scientist working in a laboratory.

Image Source: Qiagen.

Now what

While an acquisition of Qiagen makes sense, there's no guarantee that management can find a buyer willing to pay what Qiagen's board believes it's worth, especially with uncertainties around how the new next-generation sequencing partnership with Illumina (NASDAQ: ILMN) will work out. Arguably, that partnership could throw a wrench into acquisition plans, considering that Thermo Fisher has its own next-generation sequencing platform called Ion Torrent.

If a deal does end up getting done, investors shouldn't expect much of a premium from here given that shares have already largely priced in a potential sale. Qiagen was a great -- albeit risky -- buy after the October drop, but at this point, investors looking for new investments should probably look at other healthcare companies.

10 stocks we like better than Qiagen
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Qiagen wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 1, 2019

 

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Illumina. The Motley Fool recommends Qiagen. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

QGEN TMO ILMN

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More