Albany Molecular Research, Inc. (AMRI) is weathering the current economic storm in commendable fashion. The company reported strong second-quarter results on Aug 6, forecasted a bullish full-year earnings projection and bears the favor of an accelerating share price.

Company Description

Albany Molecular Research provides contract services to pharmaceutical and biotechnology companies in the U.S. and internationally. The company was founded in 1991, has a market cap of $576 million and is headquartered in Albany, New York.

Albany is one of the few company’s that has performed well in the choppy market over the last few weeks, with its share price actually hitting a new 52-week high. This strength is a product of Albany’s fundamental profile, on full display when the company reported excellent second-quarter results on Aug 6.

Second-Quarter Results

Revenue was up 17% from last year to $57.9 million. Adjusted operating income jumped to $11 million from $6.6 million in the same period last year, producing earnings of 24 cents per share, far ahead of analyst estimates of 10 cents.

This is the second consecutive time that Albany has surprised and handily beaten analyst estimates, having done so last quarter by 400%, earning 10 cents per share against the expected 2 cents.

Liquidity

At the end of the quarter, Albany reported cash and cash equivalents of $91 million, compared to just $13.7 million in total debt. This provides Albany with a nice financial cushion when new capital is not only hard to come by, but very expensive.

Guidance & Estimates

Chief financial officer Mark Frost provided bullish guidance for the company’s outlook, saying he now expects 2008 full-year revenue between $186 and $190 million, which would represent a 16% gain from 2007.

The analyst community agrees, with the current-year estimate spiking up to 53 cents from 38 cents 60 days ago. The next-year estimate is bullish as well, pegged at 64 cents per share, a 20% earnings growth projection.

Valuations

Based upon the current-year estimate, this is not a cheap stock, carrying a forward P/E multiple of 34X, a steep premium to the overall market.

The Chart

As previously mentioned, this stock has been performing quite well in a very tough market, advancing from less than $13 in early July to the recent high above $19. Moving forward, this company is going to need to produce big-time earnings gains in order to support more share appreciation because of its higher valuation.

Content Courtesy: Zacks Investment Research

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