Back to Main

Strong Sell on BioScrip - Analyst Blog

By: Zacks.com
Posted: 7/9/2013 2:50:00 PM
Referenced Stocks: ABC;BIOS;CVS;HLF;PBM

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

To read this article on Zacks.com click here.

Zacks Investment Research