Will This Upgrade Help Covance (CVD) Stock Today?

Story updated at 9:45 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Covance (CVD) was upgraded to "overweight" from "neutral" by Piper Jaffray Monday.

Covance gained 0.6% to $82.40 in morning trading.

The firm set a price target of $99 for the company. Piper Jaffray analysts said the upgrade is due to a valuation call.

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Separately, TheStreet Ratings team rates COVANCE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate COVANCE INC (CVD) a BUY. This is driven by a number of strengths, 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 increase in stock price during the past year, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and growth in earnings per share. 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 stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • CVD's revenue growth trails the industry average of 17.1%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CVD's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CVD has a quick ratio of 2.18, which demonstrates the ability of the company to cover short-term liquidity needs.
  • COVANCE INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COVANCE INC increased its bottom line by earning $3.16 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($3.84 versus $3.16).
  • You can view the full analysis from the report here: CVD Ratings Report
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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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