Covance, Inc. (CVD)

Let’s face it, investing in drug developers isn’t easy. First, there’s the science risk – the chance that the company’s best drug prospect will fail somewhere during the arduous clinical trial and regulatory approval process. If that weren’t enough, there’s the market risk – the chance that someone else either brings their competing drug to market first, or brings a more effective drug to market later. If, however, you are looking for a way to capitalize on the overall uptrend in the pharmaceutical industry without taking on risks than can, and often do, border on speculation, Covance may well be a candidate worthy of serious consideration.

After all, “selling pickaxes to gold prospectors” may seem like an overly used analogy in the business and investing world, but finding these kinds of companies can be a great way to boost your portfolio’s returns without taking on the speculative risk of doing the prospecting on your own.

This stock was hit in late October after reporting 3Q profit was in line with analyst expectations. I think that CVD is still in a strong enough position to make a great investment, though growth may be slowing. Either way, the P/E isn't terrible for such a stock. Drug companies HAVE to develop new drugs to stay in business, and those companies need someone like CVD to help develop new products. I have not done enough research on this company yet, and am not putting any real money in, but I will be keeping my eye on this stock and looking further into what looks like a good deal.

9/2006

97

Earnings Per Share (EPS) Rating
92
Relative Price Strength (RS) Rating
87
Industry Group Relative Strength (Grp RS) Rating
B+
Sales + Profit Margins + ROE (SMR) Rating
B
Accumulation/ Distribution (Acc/Dis) Rating
A

Tests new drugs for pharm companies, steady work, low risk

CVD is a premiere Contract Research Organization. It is continually expanding its sales to Bio-Techs and large Pharmaceuticals. It is expanding in a controlled way into the Chinese market.

Covance is notorious for its cruel treatment of its laboratory animals and is the subject
of a major campaign by Peta. Unlike most industries that use animals, Covance has
been totally resistant to negotiation on this issue. I believe this is a sign of unethical
management and expect this company to do poorly.

Pharma is among the least affected industries, however they are seeking cost reductions, effiiciency gains, etc like everyone else. The usual and likely avenue for that is CROs, and if you read the news for this company, they are already reeping rewards.

growing business sector; great execution thus far; less risk than competitor PPDI

This company appears to be the best in its field. also with more and more drug companies

trying to cut expenses, they are outsourcing

these services. Covance should do well for

many years to come. They are efficient and fast.

Currently a 3 bagger for me and still looking strong. Riding the boomer wave.

Pummeled. Absolutely pummeled. From $100 to $40 this year.

But the company remains solid in every respect, and is almost guaranteed a comeback. Not to mention that the biotech sector is seeing some action as a hedge against a recession. I'm loading up on biotechs, but would probably take CVD either way.

I put it at $60 by June.

drus will go up

Will benefit from pharma outsourcing

FIrstly it's quite clear this one has only dropped because of the market volatility. A sector leader constantly improving on itself, as is evidenced in a number of accolades this year from its own customers. The only thumbs down below is obviously from a peta activist -- all sane writers here are thumbs up. Other than a full blown market crash, this one practically HAS to go back up. 60$ easy when the indices trend up, 80$ when recession talk dies, and 100$ a year after that.

way oversold

Worldwide drug development needed - great entry point & 71-0 outperform calls by caps all stars

Strong Sector for 2010

contract research organization (CRO) should benefit of increasing drug tests and testing to get FDA approval.

Showed up on a screen for solid 5 year growth with low debt, cash on hand and still at attractive P/E ratios.