Revance shares downgraded amid Crown acquisition offer

Revance Therapeutics (NASDAQ: NASDAQ:) saw a shift in stock rating as William Blair moved the company’s status from Outperform to Market Perform.

The adjustment, which came on Monday, follows the announcement that Crown Laboratories will initiate a bid to purchase all outstanding shares of Revance at $6.66 each in cash. This offer values Revance at an approximate total enterprise value of $924 million.

The proposed acquisition price reflects an 89% premium over Revance’s closing share price on Friday and a 111% premium to the company’s 60-day volume-weighted average price.

The transaction is anticipated to be finalized by the end of the year, at which point Revance will become a wholly-owned subsidiary of Crown Laboratories and will cease to be publicly traded.

The downgrade by William Blair is based on the proximity of Revance’s current trading price, approximately $6.60, to the proposed acquisition price. The limited difference between the trading price and the offer price suggests minimal opportunity for significant gains, leading to the revised rating of Market Perform.

Revance Therapeutics reported a 20% year-over-year increase in its total net revenue, reaching $65.4 million in the second quarter of 2024. This growth was largely driven by a 65% increase in units sold and a 27% rise in net product revenue in its aesthetics division. The company is on track to achieve its revenue guidance of $280 million for the year and projects positive adjusted EBITDA by 2025.

Revance’s move to merge with Crown Laboratories, a private global skincare company, has been unanimously approved by the Revance Therapeutics board. The merger, valued at approximately $924 million, is expected to close by the end of the year. Stifel, a financial services firm, downgraded shares of Revance Therapeutics from Buy to Hold, significantly reducing the price target to $6.66 from the previous $20.00.

Additionally, Revance launched DAXXIFY, a new product for cervical dystonia, and expects to generate modest revenue from it in 2024. Despite observing some softness in the aesthetics market, the firm anticipates consistent growth for the RHA product line and sequential growth for DAXXIFY.

InvestingPro Insights

Revance Therapeutics’ (NASDAQ:RVNC) proposed acquisition by Crown Laboratories has been a significant catalyst for the company’s stock, with an offer price that sharply contrasts with its recent market performance. Notably, Revance’s market capitalization stands at approximately $688.69 million, reflecting the market’s valuation of the company. Despite the proposed premium on the acquisition price, it’s important to consider that Revance has been quickly burning through cash, which could have implications for its long-term financial sustainability.

InvestingPro Tips indicate that while there has been a significant return over the last week, with a 15.36% price total return, analysts are skeptical about the company’s profitability in the near term. Moreover, Revance’s price has fallen significantly over the last year, with an 81.33% drop in the one-year price total return, underscoring the volatility and challenges faced by the company. Additionally, the company does not pay a dividend, which may influence investment decisions for income-focused shareholders.

For investors considering the implications of the acquisition, it’s worth noting that Revance’s liquid assets exceed its short-term obligations, which may provide some financial flexibility in the near term. Interested parties can find an additional 6 InvestingPro Tips for Revance at InvestingPro, offering deeper insights into the company’s financial health and market position.

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