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Funamental Analysis: Catamaran Corporation (NASDAQ:CTRX)
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Catamaran Corporation (NASDAQ:CTRX) was dowgraded yesterday by analysts at FBR Capital from outperform to market perform. The 12 month price target for the stock was also set to $61.50. With that in mind, we find that this downgrade appears to be warranted also based on fundamental pricing of the stock. [Trend Analysis]
Catamaran Corporation (NASDAQ:CTRX) last traded at $59.54 after moving down -0.48% for the trading day.
CTRX is trading with a trailing 12 month P/E multiple of 38.92 and an estimated forward P/E multiple of 20.38. The stock has an estimated 5 year annual growth of 19.36% and a PEG multiple of 2.01.
From a value investor perspective, as mentioned Catamaran Corporation trades on an estimated forward P/E multiple of 20.38. The current estimated forward P/E ratio for the market as a whole is approximately 19.00. Therefore, for value investors CTRX appears to be fairly priced.
For growth investors, who are more interested in growth into the longer term for the stock, we look at the PEG multiple (P/E to growth) of Catamaran Corporation (NASDAQ:CTRX). This PEG multiple takes into account the expected long term growth in earnings of Catamaran Corporation rather than merely the growth for one full earnings period ahead.
As a rule of thumb, growth investors often believe a stock with a PEG of between 0 and 1 is considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of CTRX being 2.01, we consider Catamaran Corporation to likely be overpriced.
The mean analyst 12 month target price for Catamaran Corporation (NASDAQ:CTRX) is currently $58.88 or 1.11% below the current price. Additionally, the stock has been as high as $60.24 and as low as $36.98 in the last 52 weeks. Analysts are estimating that CTRX will report earnings per share of $0.63 next quarter.