Goldman Sachs upgraded Covance (CVD ) to outperform from in-line.
Analyst Christopher McFadden says he increasingly believes Covance's diversified asset mix, strong positioning in the faster-growing preclinical and biotech-driven markets, and potential upside to 2004 earnings estimates are not currently reflected in the share price. He notes with a central lab, backlog growth concerns are largely reflected in Covance's valuation, and investors are presented with a compelling entry point based on a high level of earnings visibility through 2004.
McFadden notes at 6.6 times his 2004 EBITDA estimate, shares are at a discount to the group average of 7.1. He sees $1.21 2003 earnings per share, and $1.42 for 2004.