Thursday, Credit Suisse initiated coverage of PharMerica Corp. (PMC) stock with a Neutral rating and a price target of $18. The brokerage established its 2008 EPS estimate of $0.89, its 2009 estimate of $1.10, and its 2010 estimate of $1.28.
Analyst Santangelo believes that PharMerica is well positioned to benefit from the positive secular trends in the long-term care industry and that the company's management team has done a good job in integrating the two long-term care pharmacies of AmerisourceBergen and Kindred since the spin-off in August 2007.
However, the analyst initiated at Neutral rating owing to: near-term expectations are high; PharMerica's current valuation is expensive relative to its peer group; and over the next few months, PharMerica will need to re-sign Golden Living, its second largest customer. The analyst therefore believes a Neutral rating is appropriate.
The analyst said that the investment positives for PharMerica are: integration is running ahead of schedule and cost synergies related to the integration could be greater than expected, operating leverage could drive further profit and margin expansion opportunities, and increased generic drug utilization should help boost margins.
The analyst said that the risk factors are: exposure to Medicaid and Medicare Reimbursement-given the new administration and state budget concerns, he believes there is a possibility nursing home reimbursement could get cut; 22% of PharMerica's revenues are derived from its two largest customers, and Golden Living's contract expires in March 2009; and margin expansion could fall short of high Street expectations.
Currently, PMC is down $0.33 or 2.05% and trading at $15.77.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.