Covetrus Inc. (CVET:NSD) William Blair downgraded to Market Perform

STA Research
by: STA Research
Covetrus Inc.

William Blair just downgraded the rating on Covetrus Inc. to a Market Perform from an Outperform rating.

Based on the Covetrus Inc. stock forecasts from 4 analysts, the average analyst target price for Covetrus Inc. is USD 21.00 over the next 12 months. Covetrus Inc.’s average analyst rating is Under-perform. Stock Target Advisor’s own stock analysis of Covetrus Inc. is Neutral, which is based on 5 positive signals and 6 negative signals. At the last closing, Covetrus Inc.’s stock price was USD 19.70. Covetrus Inc.’s stock price has changed by +3.20% over the past week, +4.81% over the past month and -25.10% over the last year.

Covetrus, Inc. is an animal-health technology and services company that operates through its subsidiaries. It sells branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, parasiticides, and vitamins and supplements to wholesale and retail customers. HS Spinco, Inc. was the company’s previous name. The company Covetrus, Inc. was founded in 2018 and is based in Portland, Maine.

What we like:

Superior risk-adjusted returns

This stock has performed well, on a risk-adjusted basis, compared to its sector peers (for a hold period of at least 12 months) and is in the top quartile.

Underpriced compared to book value

The stock is trading low compared to its peers on a price-to-book value basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Superior Revenue Growth

This stock has shown top quartile revenue growth in the previous 5 years compared to its sector.

 

What we don’t like:

High volatility

The total returns for this company are volatile and above the median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

Overpriced compared to earnings

The stock is trading high compared to its peers on a price to earning basis and is above the sector median.

Overpriced on a cash flow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering buying.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Overpriced on a free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering buying.

Low Earnings Growth

This stock has shown below median earnings growth in the previous 5 years compared to its sector.

 

 

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