Shares of Albany Molecular Research Inc. rebounded Tuesday as a Jefferies & Co. analyst recommended the stock, saying that although the company reported a weak fourth quarter, demand is solid and revenue is growing.
Albany Molecular's stock rose 85 cents, or 9 percent, to $10.26, trading on higher-than-average volume. The stock fell 6 percent Monday to close at $9.41 after the company reported a wider-than-expected quarterly loss.
Nonetheless, Albany Molecular said its large-scale business segment posted a $5.5 million improvement in gross margin, increasing from 3 percent in 2006 to 10 percent in 2007. Separately, the company declared a $20 million share buyback plan.
In a note to investors, Jefferies analyst David Windley called the results poor, but said margin expansion is possible amid increasing revenue.
"Knowing that Albany's business is not flawed and the stock now trades at a 5 percent to 10 percent discount to book value, we are quite comfortable recommending Albany Molecular Research to investors looking for a 30 percent-plus return in the next 12 to 18 months," said Windley.
He reiterated a "Buy" rating and lowered his price target by $1 to $14.
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