Chances Of Advisory Board Getting Taken Out Just Got Considerably Higher

Healthcare and Educational Consulting firm The Advisory Board Company ABCO shares were moving higher Monday on potential takeout talks.

Baird believes the probability of ABCO being acquired has “increased considerably in recent days, given reported interest from multi strategic bidders.”

Despite a takeover catalyst, the firm sees the downside risk of a no-deal scenario as limited, citing a strong rally of Health IT peers and Elliot Associates involvement in the company that includes a 8.3 percent stake in the company as of March 2.

Baird upgraded the stock to Outperform and raised its price target to $53 from $50.

"Multiple unsubstantiated reports from last week indicate ABCO has attracted interest from a number of parties, including EQT, Pamplona Capital, and EVH. Additionally, it appears ABCO will sell its healthcare and education businesses separately."

Analysts believe the takeout has a higher than 50 percent probability around the $55 price level and a 15 percent possibility above $60. The possibility of no deal was assumed at 35 percent.

Shares were up nearly 5 percent on Monday following the upgrade.