Baxalta (BXLT) was recently spun-off from Baxter International (BAX) on July 1st, 2015. The company has 16,000 employees and around $6 billion in expected revenues.

Baxalta is expected to have around $2.15 in earnings-per-share in its first full fiscal year. The company has traded around $32 a share since the spin-off. This translates to a price-to-earnings ratio of just under 15.

The typical biopharmaceutical stock trades for significantly higher multiples. Many of the company's peers trade for price-to-earnings multiples well over 20.

Baxalta appeared significantly undervalued. The stock inherited a long dividend history from Baxter and management confirmed it would continue making the dividend a priority. Baxalta's combination of value, solid growth prospects, and continued dividend payments made the stock a favorite of the Sure Dividend system.

Baxalta was the 2nd highest ranked stock in the July 2015 Sure Dividend newsletter. Click here to learn more about the Sure Dividend newsletter. On July 5th the newsletter had this to say about Baxalta:

“Baxalta's high expected total returns and competitive advantage should give the company a P/E ratio above the S&P 500's. Fortunately for shareholders, Baxalta's P/E ratio is still low at around 13.3. The company's P/E ratio is being suppressed due to selling from the recent spin-off. Now is an excellent time to buy into this high quality pharmaceutical business, while the P/E ratio is still low.”

It was an excellent time to buy into Baxalta.

Yesterday morning, Shire Plc announced they had offered to acquire Baxalta for $45.23 a share on July 10th. Baxalta's management did not accept the offer. At a price of $45.23 a share, Baxalta would have a price-to-earnings ratio of 21, which is closer to its peer average and around fair value for a high quality dividend growth stock.

Obviously, Shire would not offer more money than it felt Baxalta was worth. Shire's announcement confirms Baxalta's undervalued status.