Citi cut R1 RCM (NASDAQ:RCM) to Neutral from Buy in a note Friday, raising the price target to $16 from $14 per share, telling investors an acquisition is "highly likely."
The move to adjust its rating for the stock follows New Mountain’s recent offer to buy the company for $13.75 per share.
"As we previously noted we view New Mountain’s bid as an opening salvo, intended to garner additional private equity interest in the asset," wrote analysts at the bank.
The firm feels the starting price will spur a bidding war, with a mid-to-high-teens share price still presenting a compelling investment opportunity for a private equity firm.
"We think it is likely that R1 is acquired for a higher price. Our $16 price target is based off of a 12x adj.EBITDA multiple. This is in line with recent transactions in the space," they added.