Why PharMerica Shares Popped

Why PharMerica Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PharMerica rose nearly 25% today after the company released an all-around superb earnings report for the third quarter.

So what: PharMerica's revenue came in at $436.8 million for the quarter, a 1% year-over-year decline but much better than the $401.7 million consensus. The company's adjusted earnings of $0.49 per share also trounced Wall Street's projections of $0.33 in EPS. Guidance for the full year now comes in ahead of what Wall Street had expected on the top and bottom lines -- revenue of $1.7 billion to $1.725 billion bests the $1.67 consensus, and full-year EPS guidance in the $1.71 to $1.76 range runs roughshod over the $1.55 bottom-line consensus. Both ranges were significant upgrades from earlier guidance ranges, and point to renewed strength for the pharmacy-services company.

Now what: Today's pop returns the up-and-down shares of PharMerica to 52-week highs, and today's post-pop price is actually higher than any level seen since the summer of 2010. But this yo-yo performance is worth considering before you dive in, as PharMerica's trailing 12-month revenue was already at the high end of its guidance range before today's earnings release. This pop was a great reward for loyal shareholders, but newly interested investors may want to tread cautiously.

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The article Why PharMerica Shares Popped originally appeared on Fool.com.

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Originally published