Jefferies analyst Jeffrey Holford views a tie-up between Zoetis (ZTS) and Bayer's (BAYRY) Animal Health business in 2016 as "highly likely." Such a "spinversion" could achieve up to 36% long-term earnings accretion for Zoetis, the analyst tells investors today in a research note. He sees Mylan's (MYL) acquisition of Abbott's (ABT) non‑U.S. developed markets specialty and branded generics business as a potential proxy for how a transaction could be structured between Zoetis and Bayer Animal Health to achieve an inversion. Holford reiterates a Buy rating on Zoetis with a $60 price target. He downgraded Bayer this morning to Hold from Buy citing valuation following the recent outperformance of the stock.

RBC Capital lowered the firm's price target on Abbott to $125 from $128 but keeps an Outperform rating on the shares. The analyst states that despite a strong Q1 with 10.8% underlying revenue and double-digit EPS growth, the stock was down 3%, which reflects sentiment on the broader MedTech space, where high expectations require a beat and raise for stocks to be rewarded. RBC maintains however that it sees upside potential for Abbott "as 2024 drivers take hold".