Covance (CVD) is not recession-proof, but it's close

Given the market's continued choppy/consolidated pattern (or perhaps worse), one would think that there isn't a promising business model in the states today, with a technically-strong stock chart accompanying it. Pre-clinical / clinical research company Covance dispels that thesis.

Covance (NYSE: CVD) develops and conducts pre-clinical and clinical trials of potential commercial drugs. The company also offers laboratory testing services to companies in the chemical, agri-chemical, and food sectors.

Analysts like CVD's ramping drug development services demand from both pharmaceutical and biotech companies, new orders, market-share increase prospects, and the company's sector-leading research lab. The Reuters F2007/F2008 EPS consensus estimates for CVD are $2.65/$3.12.

The risks? Project cancellations, or a reduction in research and development spending by pharmaceutical and/or biotech companies would hurt CVD's results. Analysts also have their eye on a possible slowdown in drug development outsourcing.

The First Call mean rating for CVD is: Buy. [14 firms.] Mean 2008 target: $94.00. [high: $106, low: $83.]

Stock Analysis: Covance is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from CVD's shares. Sell / Stop Loss if you were to purchase shares in this company: $56.

DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.