By How Much Will Roche Increase Its Valuation for Genentech?

| About: Roche Holding (RHHBY)

Analysts are pretty much in agreement that Swiss drugmaker Roche (OTCQX:RHHBY) is going to have to pony up more than the 89 bucks it has already offered for the rest of Genentech (Private:DNA) it doesn't currently own.

The $44 billion question, of course, is how much more. Shares of DNA keep hitting new highs as investors bet that Roche will revise. We've yet to hear a formal response from the three-member committee of independent directors that Genentech has formed to evaluate the bid.

In the meantime, I think we've got a new outlier on the speculated takeout price. Sanford C. Bernstein biotech analyst Geoffrey Porges was out with a research note to clients yesterday morning titled, "Genentech: What would Genentech REALLY Be Worth? And Why $130/Share Is Not As Crazy As It Sounds."

Porges writes that his sum-of-the-parts analysis, which he details in the report, pegs DNA at $124 a share when he adds in drug development pipeline "opportunities" and drugs already on the market being approved in the future for other uses.

Porges gives an 80 percent chance of a deal getting done at $105/share or higher. And on his 20 percent odds that a deal falls through, he sees a Genentech "stand-alone" valuation of $86 a share, which was his target price before Roche stepped in. Right now he has a $101 price target.

A part of Bernstein owns at least one percent of DNA shares.

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Tagged: , Drug Related Products, Switzerland
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