Update (9:53 a.m.): Updated with Wednesday market open information.
NEW YORK (TheStreet) -- UBS initiated coverage on MWI Veterinary Supply (MWIV) with a "buy" rating and a $168 price target. The firm cited valuation and believes its recent acquisition is more accretive than initially realized.
The stock was up 1.24% to $132.74 at 9:51 a.m. on Wednesday.
TheStreet Ratings team rates MWI VETERINARY SUPPLY as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MWI VETERINARY SUPPLY (MWIV) 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 robust revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 28.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MWI VETERINARY SUPPLY has improved earnings per share by 10.9% in the most recent quarter compared to the same quarter a year ago. 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, MWI VETERINARY SUPPLY increased its bottom line by earning $4.95 versus $4.23 in the prior year. This year, the market expects an improvement in earnings ($5.60 versus $4.95).
- The net income growth from the same quarter one year ago has exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 11.1% when compared to the same quarter one year prior, going from $15.10 million to $16.78 million.
- MWIV's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
- 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, the stock's 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 the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: MWIV Ratings Report