What happened
Shares of Avid Bioservices (CDMO +0.00%), a provider of contract development and manufacturing services for biopharma companies, rose as much as 12% in afternoon trading on Monday. Shares were up about 8% as of 3:15 p.m. EST. Investors can most likely thank an analyst upgrade for today's move.
So what
Janney Montgomery Scott upgraded Avid's shares to a buy today from neutral in a report that was published on Friday after the company reported earnings. The financial company also gave the stock a $10 price target. That's quite a bit higher than Friday's closing price of $5.60.
Avid's quarterly numbers looked good, so the upgrade makes sense. Revenue came in much higher than expected, gross margin soared, and the company posted positive income from operations during the quarter. Guidance for the full year was a bit behind estimates, but that could just be because management is sandbagging.
Image source: Getty Images.
Traders appeared to be bidding up the stock today in response to the bullish price target.
Now what
2019 was a good year for the company, and management believes that it will be able to build upon that momentum in 2020. That bullish view is supported by Avid's ability to pull in new clients and win more business from its existing base of customers.
Although it was on the upswing today, this company actually has a long history of destroying shareholder value:
I'm not a big fan of buying companies that haven't done well for their long-term shareholders, so I'm content to take a pass on this stock right now. But I'd be happy to change my tune once this company starts to report sustained profit growth.
