UPDATE: Credit Suisse Upgrades PharMerica on Outlook Infused with New Growth Drivers

In a report published Wednesday, Credit Suisse analyst Glen Santangelo upgraded the rating on PharMerica Corporation (NYSE: PMC) from Neutral to Outperform, and raised the price target from $19.00 to $30.00.

In the report, Credit Suisse noted, “Although shares of PMC have outperformed the market YTD (up ~15% vs. S&P up 1%) we believe that trading at just 7.0x our 2015 EBITDA estimate and with improving fundamentals & attractive capital deployment, shares are positioned to continue to outperform in 2014. The historical concerns around reimbursement pressure, an overly aggressive competitive landscape, and dearth of organic bed growth have ameliorated. Although we recognize that the loss of its two largest customers - Kindred and Golden Living - will have a material impact throughout 2014, the company's right-sizing efforts and F15 outlook highlight a reaccelerating growth profile.

"We believe that as PMC moves through the transitional year of 2014, the company should benefit from: 1) improving bed retention and sales efforts; 2) seemingly benign government reimbursement landscape; 3) a reaccelerating generic calendar; 4) improved Rx purchasing opportunities; 5) better than expected accretion and growth from the company's growing presence in the home/specialty infusion market; and 6) cost-structure optimization.”

PharMerica Corporation closed on Tuesday at $24.76.