UPDATE: Raymond James Upgrades Quintiles Transnational on Continued Bullish Thesis
In a report published Wednesday, Raymond James analyst Alexander Y. Draper upgraded the rating on Quintiles Transnational Holdings (NYSE: Q) from Outperform to Strong Buy, and reiterated the $50.00 price target.
In the report, Raymond James noted, “We are upgrading shares of Quintiles to a Strong Buy from an Outperform and maintaining our $50 price target. Our upgrade is due to our continued bullish thesis for the late stage contract research organization (CRO) space coupled with Q's underperformance in the past week (-6.9% vs. -2.3% for both the S&P 500 and the late-stage CRO peer group). Q is currently trading at a favorable valuation of 18.1x our CY14 non-GAAP EPS vs. an average 21.8x multiple for the late stage peer group. We continue to like the late stage CRO space as 1) we expect pharma R&D spending to modestly rebound, 2) outsourcing penetration levels are increasing; 3) the larger CROs are gaining market share from the smaller ROs as they have greater geographic scope and therapeutic expertise. In particular, we like Quintiles as the company is the largest player in the CRO space (1.7x larger than its closest peer by 2012 revenue) and the company has very low customer concentration.”
Quintiles Transnational Holdings closed on Tuesday at $41.58.
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