American Oriental Rises on 'Buy' Rating

Shares of American Oriental Bioengineering, which makes plant-based Chinese medicines, climbed 73 cents, or 6.7 percent, to $11.48 in afternoon trading. Over the past year, the stock has ranged between $6.83 and $14.48.

In a note to investors, analyst Anindya Chatterjee said the China-based company has proven its ability to integrate its acquired businesses.

Since February 2003, American Oriental has purchased six companies, Chatterjee pointed out.

"American Oriental has been able to integrate its past acquisitions successfully, ensuring growth and profitability of its expanded product line going forward," Chatterjee said. "We expect American Oriental's existing business, not incorporating further acquisitions, to expand fully 32 percent CAGR over the next three years." CAGR refers to compound annual growth rate, the average annual percentage growth rate.

He raised the price target on the company to $20 from $10.76.