TSC Ratings' Updates: Morgan Stanley

The following ratings changes were generated on Wednesday, Jan. 21.

We've upgraded pharmaceutical services company AmerisourceBergen(ABC Quote) from hold to buy, driven by its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue increased by 5.3% since the year-ago quarter, and EPS improved by 17.7%. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income grew by 31.2% compared with the year-ago quarter, from $87.6 million to $114.9 million. Net operating cash flow increased by 303% to $514.1 million. The company has a low debit-to-equity ratio of 0.4, which is below the industry average, implying successful management of debt levels, but its 0.5 quick ratio displays a potential problem in covering short-term cash needs. ...