NEW YORK (TheStreet) -- Shares of Hospira Inc. (HSP) are up 3.79% to $53.68 on heavy trading volume this morning after it was reported that Danone (DANOY) is in talks to sell its medical nutrition business to the company, a provider of injectable drugs and infusion technologies, in a deal valuing the unit at about $5 billion, the Financial Times reported yesterday.
TheStreet Ratings team rates HOSPIRA INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HOSPIRA INC (HSP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 188.6% when compared to the same quarter one year prior, rising from -$76.60 million to $67.90 million.
- 44.55% is the gross profit margin for HOSPIRA INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HSP's net profit margin of 6.46% significantly trails the industry average.
- Powered by its strong earnings growth of 186.95% and other important driving factors, this stock has surged by 31.12% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: HSP Ratings Report
TheStreet's Brittany Umar breaks down the details with The Deal's Paul Whitfield: