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Why Cambrex Corporation Earned a Higher Share Price Today

By Brian Orelli, PhD - Feb 9, 2016 at 1:18PM

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A solid forecast for the year ahead pumped up the drugmaker.

What: Cambrex (CBM) is up 15% at 12:20 p.m. ET after releasing fourth-quarter earnings this morning.

So what: Sales by the drugmaker increased 22% year over year in the fourth quarter thanks to increases in volumes of active pharmaceutical ingredients that other drugmakers use to produce their drugs. Cambrex also noted that the generic drugs it sells directly contributed to the growth as well.

Cambrex had some restructuring charges in the fourth quarter associated with its decision to sell its facility in India, which also caused its tax rate to go up. Fourth-quarter earnings on a GAAP basis fell from $0.89 per share last year to just $0.53 per share this year.

But excluding those and other issues, adjusted earnings per share came in at $1.01, a huge increase compared with $0.64 in the year-ago quarter.

Now what: Management guided for sales to increase 8% to 12% in 2016. Adjusted earnings per share are expected to come in between $2.46 and $2.58, up at least 5.6% from the $2.33 it earned in 2015.

It's easy to see why investors are pumping up the value of Cambrex given the potential for double-digit sales growth. Looking forward, the drugmaker has a new facility in Iowa set to open by the end of this quarter that can increase its capacity for growth in the years ahead.

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. 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.

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