NEW YORK (TheStreet) -- Shares of MWI Veterinary Supply (MWIV) are up 8.11% to $189.90 in pre-market trade after it was reported that AmerisourceBergen Corp. (ABC) , the U.S. drug distributor, agreed to buy the company for $2.5 billion to add fast-growing animal-health supplies, Bloomberg reports.
Amerisource will offer $190 a share in cash for Boise, ID-based MWI, the companies said in a statement today. The price is 8.2% above the closing level for MWI on January 9, Bloomberg noted.
The purchase will add about 8 cents a share this year to earnings at Valley Forge, PA-based Amerisource, the company said. Sales of veterinary products are increasing as people spend more on pets and eat more meat, boosting demand for animal feed and medicines, Bloomberg said.
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"Animal health is a growing market in the U.S. and internationally, and is a logical extension of our pharmaceutical-distribution and services businesses," said Amerisource CEO Steven Collis.
Separately, 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 a few notable 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 robust 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."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 19.8%. Since the same quarter one year prior, revenues rose by 31.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MWI VETERINARY SUPPLY has improved earnings per share by 21.4% 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 $5.65 versus $4.95 in the prior year. This year, the market expects an improvement in earnings ($6.24 versus $5.65).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income increased by 22.3% when compared to the same quarter one year prior, going from $14.22 million to $17.38 million.
- Net operating cash flow has significantly increased by 243.33% to $4.33 million when compared to the same quarter last year. In addition, MWI VETERINARY SUPPLY has also vastly surpassed the industry average cash flow growth rate of -20.26%.
- MWIV's debt-to-equity ratio is very low at 0.16 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.
- You can view the full analysis from the report here: MWIV Ratings Report