Silk stock skyrocketed Tuesday after Boston Scientific agreed to buy the medical devices company for $1.16 billion.
The acquisition centers on Silk Road Medicine's stroke prevention product, known as transcarotid artery revascularization, or TCAR. This is a minimally invasive procedure to prevent stroke in patients with carotid artery disease.
Under terms of the deal, Boston Scientific will pay $27.50 per share of Silk stock. Silk shares closed at 21.67 on Monday. On today's stock market, Silk stock soared 24% to 26.88. Boston Scientific stock rose a fraction to 76.31.
"The deal value equates to five times forward enterprise value/revenues multiple, which seems very reasonable for an asset growing about double digits," Evercore ISI analyst Vijay Kumar said in a report to clients. He notes Silk Road expects $194 million to $198 million in sales this year.
Silk Stock: Limited Impact On EPS In 2024-25
The Food and Drug Administration approved Silk's platform in 2015. It diverts blood away from the brain during carotid intervention to help prevent strokes. Boston Scientific plans to add the TCAR platform to its peripheral interventions segment.
Last year, that segment generated $2.11 billion in sales, growing 11.1% on a strict, as-reported basis.
Boston Scientific and Silk Road expect the deal to close in the second half of this year. The transaction will have an "immaterial" impact on adjusted earnings this year and next, and will be accretive to profit beginning in 2026, Kumar said.
He has an outperform rating and 78 price target on Boston Scientific stock, though he doesn't list a rating for Silk stock.
Silk shares have a strong IBD Digital Relative Strength Rating of 93 on a scale of 1-99, measuring a stock's 12-month performance. This puts Silk stock in the leading 7% of all stocks on that measure.
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