No valuation floor for One Medical in a potential Amazon deal break - analyst
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One Medical (NASDAQ:ONEM) may have no real "valuation floor" if Amazon (NASDAQ:AMZN) decides to terminate the deal due to pressure from U.S. antitrust regulators. One Medial fell 1.5% after dropping 2.1% on Friday.
"If the deal falls through, we suspect there is no valuation floor for ONEM's shares considering its multi-year pathway to profitability and the industry's shifted focus from growth at all cost to the bottom line," Deutsche Bank Bank analyst George Hill, who has a hold rating an $18 price target, wrote in a note on Monday.
The note comes after media reports on Friday that the Federal Trade Commission is preparing a potential antitrust lawsuit against Amazon (AMZN) about alleged anticompetitive business practices. A Bloomberg report indicated a broader lawsuit could also include the company's plans to buy One Medical (ONEM) and iRobot (IRBT). A Dealreporter item also said the FTC hired outside economists to reviews Amazon's planned $3.5 billion takeover of One Medical. 
"Given the increasing scrutiny on big tech companies, the lack of a strategic rationale, and some modest pressure at the margin in the MA segment, we would not be surprised if Amazon were to abandon its deal for ONEM, leaving ONEM equity holders in the lurch," Hill added.
Hill highlighted that he doesn't see a valuation floor for One Medical's (ONEM) stock as the company has reported two "disappointing quarters" since July, with both Q2 and Q3 results "meaningfully" lower than consensus estimates.
One Medical (ONEM) traded at $10.18 before the deal with Amazon (AMZN) was announced in late July and One Medical (ONEM) traded at $8.28 on July 1, before a report that the company had received takeover interest, representing potential 82% downside.
To be clear, Amazon (AMZN) can't just walk away from the One Medical acquisition. Under the definitive merger agreement, the parties are required to litigate if any authority tries to block the combination on antitrust grounds. 
One Medical (ONEM) short interest is 7.6%.