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Vitae Pharma downgraded after Allergan takeover offer

Last updated: 20:52 14 Sep 2016 BST, First published: 15:52 14 Sep 2016 BST

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Vitae Pharmaceuticals (NASDAQ:VTAE) shares may have rocketed by 160% after Allergan (NYSE:AGN) said it would buy the company on Wednesday, but brokers at Wedbush downgraded the small stock to neutral and trimmed the share price target to $21.

As reported earlier, Allergan agreed to acquire Vitae Pharmaceuticals in a deal valued at about $639mln. Under the terms of the deal, Allergan will pay $21 per Vitae share in cash - a premium of 159% to VTAE's September 13 closing price of $8.10.

The deal will strengthen Allergan's dermatology product pipeline, adding a treatment for psoriasis and other autoimmune disorders, as well as a treatment for atopic dermatitis.

But as is typical of such situations, the stock was downgraded. “Our price target is based on the announced acquisition offer made by Allergan,” said Wedbush.

The broker added: “We believe the acquisition price reflects Allergan's confidence in the blockbuster potential for both VTP- 43742 for autoimmune diseases, VTP-38543 for atopic dermatitis, and the Contour drug discovery platform.”

Vitae shares were up 157% at $20.84 on Wednesday.

Meanwhile, retail store Macy's (NYSE:M) was upgraded to "buy" from "neutral" by brokers at Citi, which said the retailer has an attractive free cash flow and dividend yield, and is making the right moves in a difficult retail environment.

Macy’s shares were up 1.7% at $35.26

Consolidated Edison Inc (NYSE:ED), the holding group, was upgraded to "buy" from "hold" at Jefferies, which cited valuation for the move involving the New York City-based utility's shares.

Con Ed shares were up 1.3% at $74.19.

Designer wear maker Coach Inc (NYSE:COH) was cut to "underweight" from "equal-weight" at Morgan Stanley, which questions whether a sustainable turnaround is occurring at the handbag maker.

Coach shares applied the brakes and were down 2.3% at $35.46.

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