Hillrom (NYSE: HRC) stock rocketed today after a Wall Street Journal report that Baxter (NYSE: BAX) is in the early stages of talks to acquire the company.
WSJ cited people familiar with the matter, who added that there was no guarantee the two companies will reach an agreement.
HRC shares are up 8.7% to $134.49 apiece in afternoon trading. BAX shares are down slightly at $81.99. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, is up slightly.
Senior research analyst Mike Matson at Needham & Co. noted that a deal would make some sense since the two companies have minimal product overlap and Hillrom’s connected care and patient monitoring focus could be complementary to Baxter’s hospital care portfolio. “However, we are skeptical that HRC’s mid-single-digit organic growth would prove very accretive to BAX’s revenue growth rate, which we believe is similar to HRC’s,” Matson added.
Baxter reports Q2 earnings tomorrow, and Hillrom reports Q3 earnings on Friday.