UKRAINE – 2021/05/27: In this photo illustration, a Hillrom (Hill-Rom Holdings) logo seen on a … [+] smartphone and a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images

[Updated: Sep 10, 2021] HRC Stock Update

Last month we discussed that the stock price of Hill-Rom Holdings, best known for its hospital beds and patient mobility solutions, will likely see further gains if Baxter were to revise its acquisition bid. Baxter has now revised its offer from $144 per share to $156 per share for Hill-Rom
HRC
. As such, HRC stock has risen nearly 20% over the month, while it is up 55% year-to-date. Hill-Rom has now accepted Baxter’s revised bid.

The acquisition appears to be good for both the companies. For Hill-Rom it is getting its desired price, while for Baxter it will add connected care offerings to its portfolio, and the transaction is expected to be low double-digit EPS accretive in 2023 and rising thereafter.

BAX stock has thus-far underperformed the broader indices this year, with a rise of just 2% compared to 21% growth for the S&P500. Despite the underperformance, BAX stock appears to be more expensive than some of its industry peers, including Abbott. Our dashboard – Better Bet Than Baxter Stock – has more details.

[Updated: Aug 5, 2021] HRC Stock Rise

The stock price of Hill-Rom Holdings, best known for its hospital beds and patient mobility solutions, has seen a rise of nearly 18% over the last twenty-one trading days, and it is also up a solid 40% year-to-date. The recent rise can be attributed to reports of Baxter’s plan to acquire Hill-Rom. In fact, Hill-Rom has reportedly rejected a $144-per-share bid of Baxter stating it to be too low. [1] Since then the stock has rallied from $115 levels to $137 currently.

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Now that HRC stock has seen a rise of 18% in twenty-one trading days, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a strong chance of a decline in HRC stock over the next month. Out of 20 instances in the last ten years that HRC stock saw a twenty-one day rise of 18% or more, 16 of them resulted in HRC stock falling over the subsequent one month period (twenty-one trading days). This historical pattern reflects 16 out of 20, or about 80% chance of a decline in HRC stock over the coming month. See our analysis on Hill-Rom Stock Chances of A Decline for more details.

However, as a similar change has occurred very few times historically, we cannot draw a direct conclusion. In fact, given the current situation where the stock price move is being driven on hopes of an acquisition deal, it is likely that the stock will not follow the historical pattern. If Baxter were to revise its bid, it is likely that HRC stock may see higher levels.

Calculation of Event Probability and Chance of Rise using last ten years data

After moving 4% or more over a five-day period, the stock rose in the next five days on 61% of the occasions.
After moving 16% or more over a ten-day period, the stock rose in the next ten days on 56% of the occasions
After moving 18% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 20% of the occasions.

Predict average return on Hill-Rom Stock Return: AI Predicts HRC Average and Excess Return After a Fall or Rise

Hill-Rom Stock Return (Recent) Comparison With Peers

Five-Day Return: GE highest at 684%; CNMD lowest at -7.9%
Ten-Day Return: GE highest at 687%; CNMD lowest at -4.7%
Twenty-One Days Return: GE highest at 697%; CNMD lowest at -7.1%

While HRC stock may see lower levels, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Hill-Rom vs. Quest Diagnostics
DGX
.

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