UPDATE: Cowen Upgrades PharMerica (PMC) to Outperform

Cowen upgraded PharMerica (NYSE: PMC) from Market Perform to Outperform with a price target of $33. Analyst Charles Rhyee noted core operations were solid and getting stronger.

"We believe the pullback since earnings reflects a view that earnings momentum has slowed as the 2Q beat is perceived to not be as strong as first look. However, we believe the market underappreciates: 1) strong underlying growth of the base business; 2) upside potential to 2014 guidance; and 3) conservative nature of 2015 consensus," said Rhyee.

"It is important to note that Golden Living continues to take its business in-house but at a pace slower than originally anticipated. We estimate that only about $0.01 of the $0.04 beat in 2Q was due to more Golden Living than expected. Further, if we normalize for the loss of Kindred and Golden Living, we estimate the underlying business is performing quite well. On an apples-to-apples basis, including the benefit of its restructured distribution agreement but excluding acquisitions, we estimates, we estimate the underlying business is growing at a very solid 7.2% y/y. Given that acquisitions are a key part of the growth story, adding back the benefit of Onco360 (an additional $0.10-$0.11), we estimate the adj. base business is growing 16.9% y/y," he added.

For an analyst ratings summary and ratings history on PharMerica click here. For more ratings news on PharMerica click here.

Shares of PharMerica closed at $24.53 yesterday.

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