This Play Could Be Man's Best Friend

Veterinary Centers of America has been, well, a dog all year, tumbling 50%, from 6 1/4 a share in March to 3 1/4 on Sept. 1. The reason: Although the company is the nation's largest provider of comprehensive health care services for animals with its 14 veterinary hospitals, earnings so far this year have failed to keep up with analysts' expectations. So why have some pros started buying in?

At its depressed levels, the company is "quite vulnerable to a takeover by a major pharmaceutical or pet-food company, which may wish to get into the veterinary business," says one California money manager. Chairman Bob Antin said the company may ultimately do a joint venture on pet-food products with a large company. But, he adds, the company is not up for sale.

But analyst Peter Mintz of Josephthal, Lyon & Ross thinks that Veterinary Centers is a good buy even without the allure of a takeover. He figures the stock is worth 8 a share, based on its earnings potential.

"Vet Centers is the only play in the booming $5 billion veterinary services industry," Mintz says. The company's potential to resume its fast-growth speed is still very much intact, he adds. Earnings so far this year have slowed because the company's acquisitions have stalled as it became "more prudent" in its search, says Mintz. But he expects more buys this year and next.

Mintz sees revenues hitting $20 million this year and $45 million in 1993, and earnings per share rising to 19 cents this year and 45 cents next year.

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