Tuesday, Shockwave Medical Inc ( SWAV ) shares traded higher following a Wall Street Journal report suggesting Johnson & Johnson ( JNJ ) is reportedly in talks to acquire the company.

Shockwave Medical ( SWAV ) is a cardiovascular medical device.

In 2022, Johnson & Johnson ( JNJ ) acquired heart failure device-focused Abiomed Inc. for an upfront payment of $380.00 per share in cash, corresponding to an enterprise value of approximately $16.6 billion. 

Piper Sandler says it has considered Johnson & Johnson ( JNJ ) a potential buyer due to its interest in expanding into cardiovascular devices and strong financial position. 

Additionally, there were reports in May 2023 indicating Johnson & Johnson’s interest in acquiring Shockwave Medical ( SWAV ). However, the Piper analyst writes that Shockwave Medical ( SWAV ) could thrive independently, maintaining the Overweight rating.

Piper’s analysis suggests that acquiring Shockwave Medical ( SWAV ) would likely require a substantial offer due to its profile. 

Compared with Johnson & Johnson’s acquisition of Abiomed, which was about 12.5x consensus 2024 revenue without milestones and closer to 13.7x with milestones, it provides a benchmark. 

Shockwave Medical ( SWAV ) reportedly sought bids around the mid-$300s per share, Piper notes, citing a StreetInsider report. 

While a Johnson & Johnson-Shockwave Medical combination seems suitable, other major players like Medtronic Plc ( MDT ) and Boston Scientific Corporation ( BSX ) , with their focus in interventional cardiology and peripheral vascular, could also be interested. 

Both Medtronic ( MDT ) and Boston Scientific ( BSX ) had shown previous interest in acquiring Shockwave Medical ( SWAV ).

The absence of obvious FTC issues suggests regulatory clearance wouldn’t be a major hurdle. A competitive bidding process could emerge, with Johnson & Johnson ( JNJ ) viewed as a strong strategic fit for Shockwave Medical ( SWAV ).

Price Action: SWAV shares closed higher by 2.07% at $322.61 on Wednesday.