Ahead Of The Bell: Covance Upgraded After Slide

NEW YORK (AP) — A Jefferies analyst upgraded shares of drug development services company Covance Inc. Tuesday, a day after the stock took a downturn.

David Windley said expectations for Covance are more reasonable following the company's presentation at a UBS life sciences conference on Monday. He said the company predicted further weakness for its preclinical testing business, which probably dampened Wall Street enthusiasm but gave a more realistic view. He said Covance's clinical and late-stage testing businesses are doing well.

Windley upgraded the shares to "Buy" from "Hold," and raised his price target to $65 per share from $56 per share. Shares of the Princeton, N.J., company dropped 4.1 percent Monday and finished at $55.01. It has traded between $95 and $31.43 over the past year.

Covance's preclinical business does research into drug candidates that have not been tested on people. That business evaluates side effects of drugs, determines how compounds work, and evaluates manufacturing conditions, among other services.

Covance was expecting more business for the preclinical division in the second half of this year, Windley said, but at the conference the company said demand probably won't improve until early 2010.