Why BioScrip Shares Rallied

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pharmacy and home health services specialist BioScrip (NASDAQ: BIOS  ) climbed 11% today after its quarterly results and guidance topped Wall Street expectations.

So what: BioScrip's fourth-quarter results -- EPS of $0.12 on revenue of $180.74 million versus the consensus of $0.01 and $173.9 million, respectively -- and outlook were so strong that analysts have no choice but to raise their valuation estimates. Unfortunately, gross margin for the quarter shrank 360 basis points due largely to lower reimbursement rates for home health, so I'd be cautious about getting too excited over the market-topping results.

Now what: Management now sees full-year 2013 revenue of $830 million-$865 million, well ahead of Wall Street's view of $769.95 million.

"In 2013, we will continue to build on our organic growth initiatives, which will be augmented with targeted acquisitions," CEO Rick Smith said. "The core drivers of organic growth will be delivering on our strong clinical programs, flexible go-to-market approach, and high-touch customer service model."

Of course, with the stock now up about 75% over the past year and trading at a forward P/E of 30, I'd wait for some of the excitement to fade before buying into that bullishness.

While you can certainly make huge gains in health services specialists like BioScrip, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Interested in more info BioScrip? Add it to your watchlist.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2307862, ~/Articles/ArticleHandler.aspx, 11/23/2014 5:24:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement