Covance Earnings Preview

Covance (NYSE: CVD  ) beat estimates by $0.02 last quarter, and investors are hoping it can beat them again. The company will unveil its latest earnings Wednesday. Covance is a drug development services company, which provides a range of product development services on a worldwide basis mainly to the pharmaceutical, biotechnology, and medical device industries.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Covance ,with eight of 15 analysts rating it hold. Analysts don't like Covance as much as competitor Pharmaceutical Product Development overall. Eight out of 11 analysts rate Pharmaceutical Product Development a buy compared with seven of 15 for Covance. Covance's rating hasn't changed over the past three months.
• Revenue forecasts: On average, analysts predict $508.1 million in revenue this quarter. That would represent a rise of 6.9% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.65 per share. Estimates range from $0.64 to $0.66.

What our community says:
CAPS All-Stars are solidly behind the stock, with 98.6% granting it an "outperform" rating. The community at large agrees with the All-Stars, with 97.3% awarding it a rating of "outperform." Fools are bullish on Covance, though the message boards have been quiet lately with only 94 posts in the past 30 days. Even with a robust four out of five stars, Covance's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q1	Q4	Q3	Q2
Gross Margin	33%	49.6%	27.1%	33.8%
Operating Margin	7.9%	5.6%	-15%	8.5%
Net Margin	6.2%	5.5%	-6%	6.3%

We can help you keep tabs on your companies with My Watchlist, our free, personalized service. Add Covance now.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.