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Strong Sell on BioScrip - Analyst Blog
Zacks Investment Research downgraded
) 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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