Canaccord Genuity analyst Kyle Rose advises investors in the near-term to sell NuVasive (NUVA) into the deal-related strength and add to positions in Smith & Nephew (SNN) on the acquisition speculation selloff.

The analyst does not find a potential of NuVasive acquisition by Smith & Nephew "to be compelling". A deal could be disruptive to Smith & Nephew's turnaround in both commercial performance and investor sentiment, Rose told investors earlier in a research note. The analyst admits to being caught off guard by Friday's Financial Times report of deal talks. Not by the idea of M&A speculation, but rather the idea of Smith & Nephew "choosing to utilize nearly all of its acquisition bandwidth on a spine acquisition," says Rose.

He believes the spine market "doesn't seem to check the right 'growth' boxes." Further, spine deals are "notoriously challenging" given the importance of the distributor/customer relationship and disruption caused in the commercial channels during integration, he adds. Should the talks progress, Rose believes it would take at least $60 per share, or a 21% premium to Friday's closing price, for NuVasive to seriously consider a deal. Shares of NuVasive are up 15%, or $7.64, to $57.19 in midday trading while Smith & Nephew is down 4% to $38.43. From a long-term perspective, the analyst says he would maintain Buy ratings on both stocks should the deal were not to be ultimately consummated.