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Stock Buybacks Review: CTSH, HSIC, CELG, MMC, And PFG

 August 22, 2011 01:09 PM

Cognizant Technology Solutions Corp. (Nasdaq:CTSH) – Stock Favorable

On August 19, the company's board of directors authorized the expansion of its existing share repurchase program by $300 million, bringing the total authorization under the current repurchase program to $600 million.

The current announcement was preceded by announcements of stock repurchases of $150 million in March 2011, and of $150 million in December 2010.

During the three months ended June 30, 2011, the company repurchased $96.1 million of its class A common stock under the stock repurchase program. Announcement of the expansion of its existing share repurchase program couldn't have come at a better time, as the company's share price fell to a new 52-week low of $54.46 on Friday.

[Related -Celgene Corporation (NASDAQ:CELG): Why Should You Invest In Celgene In 2014?]

Analysts' one year consensus target price estimates range from a low of $74 to a high of $100. The consensus is $87. Given that in the last four quarters the company's reported EPS exceeded analysts' estimates and that the consensus EPS forecast for 2011 has increased over the past month from $2.76 to $2.80, I view the stock favorably.

Henry Schein Inc. (Nasdaq:HSIC) – Stock Favorable

On August 18, the company's board of directors authorized the repurchase of up to $200 million of shares of the company's common stock. The company added that the program is in addition to the $100 million repurchase program announced in November 2010, which has been fully executed. At present, Henry Schein has approximately 91 million shares outstanding and the new authorization represents around 3.5 percent of shares outstanding at the current stock price.

[Related -Cognizant Technology Solutions Corp (CTSH): How Penetration Rates Are Faring?]

During 2007–10, the company's outstanding shares have increased from 89.6 million to 91.94 million, so it is appropriate that the company reduce its outstanding shares through repurchases.

Since announcing Q2 results on August 3, 2011, the company's share price has come down to $60.24 from $65.29 on concerns that future growth in key dental and veterinary businesses is likely to be impacted by recent signs of slowing in consumer spending and in the overall economy. However, in the last four quarters, the company's reported EPS exceeded analysts' estimates. So, I view the stock favorably.

Celgene Corporation (Nasdaq:CELG) - Stock Favorable

On August 18, the company's board of directors authorized the repurchase of up to an additional $2 billion of the company's common stock.

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