8

Buy -- Price 69 on Oct. 22
by Garp Research

Covance, which runs drug trials for pharmaceutical and biotech firms -- has been a Garp favorite due to its extremely profitable toxicology unit ... . But CVD [has carried] a hefty premium for some time ... . With over $3 of net cash a share, it trades at 12 times our 2011 E-EPS of $5.60. Market cap: $4.5 billion.

Terranova said CVD is a best of breed company with limited exposure to slowing economy. He said CVD has a business model geared toward reducing costs within the healthcare space, solid growth, strong balance sheet and Big Pharma is outsourcing R&D to reduce costs.

been good so far

Covance (CVD) was upgraded to Buy rating from Neutral at UBS. Price target and FY 2008 eps estimates hold at $98 and $2.97, respectively.

Earnings Stability Rating: 3. Clinical trial provider’s earnings growth rate is expected to hold firm in 2008. Five-year earnings growth rate: 23%.

Clinical trials company - organizes them and compiles results data.

Cramer's favorite in this space is Covance (CVD). Covance, Cramer said, handles early and late stage testing and has a solid customer base. The company also has an immaculate balance sheet, according to Cramer. Covance has $250 million in cash, no debt and $300 million in expected free cash flow over the next two years. Cramer sees the potential for Covance to trade at 37 times this year's earnings, which translates to a target price of $115, or a 33% upside. Despite being just $1 off its 52-week high, Cramer said Covance "must be bought on any weakness."

CRO both stages

"With an approaching U.S. presidential election in which health care will be a major issue, the drug makers are clearly in the political cross-hairs. That can only accelerate the flow of new drug testing to the CROs, making Covance and PPD good long-term bets."

never performed, and they imported sick monkeys into the Texas