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UPDATE: Barrington Research Initiates Coverage On PharMerica

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Barrington Research initiated coverage on PharMerica Corporation (NYSE: PMC) Thursday with an Outperform rating and $30 price target.

Analysts Michael Petusky and Tareq Affouri noted that the company is well positioned to benefit from several macro-related tailwinds "...including “the aging of the U.S. population, the increased prevalence of chronic conditions, high utilization of pharmaceuticals by seniors, and strong growth within the home infusion and oncology pharmacy spaces."

"PharMerica has acquired $220 million of annualized revenue in 2014 to date, and has a stated goal of acquiring $100 million of annualized revenue in 2015. The company has an excellent history in terms of its M&A activity, both in terms of valuation as well as integration," according to Petusky.

The analyst report highlighted that "management has taken quick and meaningful steps to reduce expenses in the wake of the loss of two key customers (Kindred and Golden Living) over the past year. We expect continuing improvement in the SG&A expense line each of the next couple of years."

The $30 price target was based on attaching a 9x multiple to the firm’s 2015 EV/EBITDA estimate and an 8.5x multiple to our 2016 EV/EBITDA expectation. PMC shares are currently trading at about 8.5x the firm’s 2014 estimates.

PharMerica recently traded at $23.19, up 2.66 percent.

Latest Ratings for PMC

DateFirmActionFromTo
Aug 2017DowngradesOutperformNeutral
Aug 2017DowngradesOutperformUnderperform
Jun 2016AssumesBuy

View More Analyst Ratings for PMC
View the Latest Analyst Ratings

Posted-In: Barrington Research Michael Petusky Tareq AffouriAnalyst Color Price Target Initiation Analyst Ratings

 

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