Cephalon Inc. (CEPH) announced today that it has agreed to be acquired by Teva Pharmaceutical Industries for $81.50 a share in cash, a 5.8% premium to the stock’s Friday close of $77.02. The company had previously disclosed on March 18th that it was rejecting an offer from Valeant Pharmaceuticals, based in Canada, for $73 per share.

While MarketGrader’s rating on Cephalon has been ‘Buy’ since January 2010, when we upgraded the stock from ‘Hold,’ it is our Sentiment rating the one that more closely tracks all of this recent acquisition activity. MarketGrader had Cephalon’s Sentiment rating as ‘Negative’ as recently as February 9th of this year. We then raised it to ‘Neutral’ as activity surrounding the stock started picking up, something that is tracked by our Price Trend and Price Momentum indicators, two of the four that make up our Sentiment score. The overall Sentiment score jumped from 4.2 to 6.1 (out of 10 possible points) on March 30th and continued climbing throughout April to the current 7.6, which indicates a ‘Positive’ rating.

MarketGrader also highlighted CEPH as the Stock of the Week on Barrons.com on September 15th, 2010 based on a closing price of $61.60 the previous day. While this highlight was based on the strength of the company’s fundamentals and not necessarily its Sentiment rating, an investor who had bought the stock following our mention of it would have gained 31.2% based Teva’s offer.

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