Strong Sell on BioScrip - Analyst Blog


Zacks Investment Research downgraded BioScrip Inc. ( BIOS ) to a Zacks Rank #5 (Strong Sell) on Jul 9, 2013.

Why the Downgrade?

BioScrip witnessed downward estimate revision since it reported disappointing first-quarter 2013 earnings results on May 8. Moreover, top-line for this provider of infusion, home healthcare and pharmacy benefit management (PBM) services is expected to decline 6.55% in the long-term.

In the first quarter of 2013, BioScrip's adjusted EPS of a penny missed the Zacks Consensus Estimate of 2 cents. The company delivered negative earnings surprises in 2 of the last 4 quarters. Moreover, losses widened as net loss from continuing operations of $7.5 million or a loss of 13 cents per share in the first quarter was worse than the net loss of $2 million or 4 cents per share in the year-ago quarter.

BioScrip still battles margin headwinds as the high-margin PBM business continued to decline. Although the company is working to deliver margin improvement, any near-term improvement is unlikely.

Reimbursement pressure remains an overhang for the company's home health franchise. The dearth of any major near-term catalyst might make it difficult for BioScrip to overcome these challenges in the near future.

The Zacks Consensus Estimate for 2013 declined 11.1% to 24 cents per share over the last 90 days as most of the estimates were revised downwards. For 2014, the Zacks Consensus Estimate went down 4.5% to 42 cents as half of the estimates were lowered over the same timeframe.

Other Stocks to Consider

Not all healthcare stocks carry an unfavorable Zacks Rank. Stocks like Herbalife Ltd. ( HLF ), AmerisourceBergen Corporation ( ABC ) and CVS Caremark Corporation ( CVS ) are likely to perform well and warrant a look. While Herbalife holds a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy).

AMERISOURCEBRGN (ABC): Free Stock Analysis Report

BIOSCRIP INC (BIOS): Free Stock Analysis Report

CVS CAREMARK CP (CVS): Free Stock Analysis Report

HERBALIFE LTD (HLF): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ABC , BIOS , CVS , HLF , PBM

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