NEW YORK (AP) -- Shares of Covance rose Tuesday after a Jefferies & Co. analyst upgraded the drug development services company, saying demand for early drug research is improving.
THE SPARK: Analyst David Windley upgraded the shares to "Buy" from "Hold" and raised his price target to $105 from $88.50.
His research shows private drug development companies reported an increase in orders in the second half of 2013, and he expects Covance to report better demand and profit margins in its fourth quarter.
THE BIG PICTURE: Covance Inc., based in Princeton, N.J., helps drug companies perform research on experimental drugs. Its industry was hit hard by the 2008 financial crisis as large drug companies cut their spending on early-stage research.
Over the first three quarters of 2013, Covance's net revenue grew 10 percent to $1.78 billion. The company expects to report its fourth-quarter results on Feb. 4.
SHARE ACTION: Covance shares rose $3.87, or 4.5 percent, to $90.72 in afternoon trading. The stock has risen about 53 percent in the past 12 months and is trading near five-year highs.
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