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Cheap stocks often make good acquisition targets. That’s because undervalued companies, especially those with strong underlying assets, established market positions, or untapped potential, can offer significant opportunities for buyers.
These companies also provide opportunities for retail investors, as shareholders can benefit from immediate appreciation of share prices when takeover offers are made. Just look Hargreaves Lansdowne stock, which has jumped 51 percent in the past year after the board agreed to take over in August.
So, here are two companies that I think could be takeover targets in 2025.
This gene editing leader looks cheap
CRISPR Therapeutics (NASDAQ:CRSP) could be an attractive takeover target due to its low valuation and strong balance sheet. It is also the world leader in gene therapy, with its approved gene editing therapy, Casgevy, generating up to $3.9bn a year. In addition to Casgevy – the world’s first approved gene therapy – the company has a strong pipeline of therapies in development, including those targeting cancer and diabetes.
The above certainly suggests that CRISPR Therapeutics is undervalued, with a market cap of only $3.3bn. This low valuation makes it an attractive acquisition target for large healthcare companies looking to enter the gene editing market. Furthermore, with $1.9bn in cash and $200m in debt, the stock’s enterprise value is just $1.6bn.
In addition, some analysts suggest that there is still a ready buyer for the CRISPR partner in Casgevy, Vertex Pharmaceuticals. Vertex is now a large company with a market capitalization of $106bn and more than $6bn in cash. Since Vertex is responsible for 60% of Casgevy’s costs and will take 60% of the proceeds, it may not make sense to consolidate control of the program – and the pipeline – by taking it over.
CRISPR is a stock I don’t own, and while I’m tempted to buy more, my holding does represent significant exposure to the gene editing sector.
Discounted stock, full price fashion
Most investors will know Burberry(LSE:BRBY)’s challenges over the past 12 months. Stocks fell on sales and challenges falling in China, where the economy appears to be missing its target.
As the share price has fallen significantly from its highs – although it has risen from recent lows – the stock is still considered a takeover target. In fact, in November 2024, there were rumors that the Italian skiwear company Moncler he was interested in founding the British luxury brand Burberry.
In addition to the strength of its brand and the unique position of British luxury, a takeover sounds possible given the consolidation that already exists in the industry. Fashion houses like LVMH again Kering we’ve acquired a number of luxury brands over the years, bringing economies of scale and synergies between things like skincare products and luxury Belmond hotels.
Having ridden Burberry’s stock all the way to the top, sold it, then bought it at a very low price only to see it go down a lot (again I sold), I’m not in favor of this brand. However, I am sure that other investors will see the opportunity.
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