Covance Earnings Preview

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Watch Covance's (NYS: CVD) earnings report to see if it can beat analyst expectations for the third consecutive quarter. The company will unveil its latest earnings on Wednesday, Nov. 2. Covance is a drug development services company that provides a range of early-stage and late-stage product development services on a worldwide basis mainly to the pharmaceutical, biotechnology, and medical device industries.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Covance, with eight of 15 rating it a buy and the remainder rating it a hold. Analysts like Covance better than competitor Pharmaceutical Product Development overall. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $521.3 million in revenue this quarter. That would represent a rise of 9.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.70 per share. Estimates range from $0.69 to $0.72.

What our community says:
CAPS All-Stars are solidly behind the stock with 99.2% giving it an "outperform" rating. The community at large agrees with the All-Stars with 97.6% granting it a rating of "outperform." Fools are bullish on Covance, though the message boards have been quiet lately with only 95 posts in the past 30 days. Even with a robust four out of five stars, Covance's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

34.6%

33.0%

49.6%

27.1%

Operating Margin

8.9%

7.9%

5.6%

(15.0%)

Net Margin

6.9%

6.2%

5.5%

(6.0%)

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At the time this article was published

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