PharMerica Corporation (PMC) has been delivering solid returns to shareholders in 2008, as its stock price has been steadily climbing for most of the year. This comes in tandem with rising analyst estimates, a reflection of the fundamental strength needed to support a higher stock price. The company has also surprised and easily beaten analyst estimates in each of the last two quarters.

PharMerica Corporation is an institutional pharmacy services company in the United States. It offers services to healthcare facilities and provides management pharmacy services to hospitals. The company carries a market cap. of $662.5 million and is headquartered in Louisville, Kentucky.

First-Quarter Results

PharMerica’s reported solid first-quarter results on May 8, a clear indication the company is progressing towards its goals. Revenue was $495.1 million, up from $174.7 million in the same period last year. The big jump of $320.4 million was primarily the result of a one-time transaction.

Net income totaled $3.3 million, compared with net income of $0.5 million in the same period last year. This figure includes $4.1 million (tax effected $2.3 million) for integration, merger related costs and other charges.

Gross profit was $72.5 million, and profit margin came in at 14.6%, compared to gross profit of $21.9 million and profit margin of 12.5% in the first quarter of 2007.

Beating Estimates

This produced earnings of 20 cents per share, ahead of analyst expectations of 13 cents. This is the second consecutive quarter that the company has handily beaten analyst estimates, reporting earnings of 21 cents in the previous quarter, 13 cents ahead of analyst expectations of 8 cents.

Estimates Rising

As the company advances and executes its growth plans, the analyst community continues to boost their estimates. The current-year estimate is now projecting earnings of 80 cents per share, up from 71 cents 90 days ago.

The Chart

Shares of PMC have had a remarkable run in 2008, advancing from less than $15 to the recent high-water mark of over $23. After establishing this new 52-week and all-time high, this stock has pulled back and is taking a breather. There appears to be considerable support at the $21.50 level.

Content Courtesy: Zacks Investment Research

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