Analyst Roundup On PRA Health Sciences After Quiet Period Ends

Analysts initated coverage on PRA Health Sciences Inc PRAH Monday with most firms rating the stock as a Buy or Outperform while Citi was less enthusiastic.

The stock recently traded at $21.98, down 0.36 percent.

Below are highlights from analyst notes, along with ratings and price targets.

Citi - Neutral, $24 price target

“PRAH, a Contract Research Organization (CRO), is performing well after its mid-2013 acquisition of peer ReSearch Pharmaceutical Services (RPS), allowing it to compete more closely with the world’s largest and most diversified CROs. The acquisition also provided key exposure to top biopharmaceutical clients, complementary to legacy PRAs position with small/mid-sized biotechs. While we favor PRA’s clinical focus & believe global CROs will benefit disproportionately from macro trends including our proprietary analysis of global drug trial starts, our relative view of valuations in the CRO subsector and PRA’s ~20 percent price appreciation post-IPO keep us on the sidelines.”

UBS - Buy, $28 price target

“As consolidation within the pharma and biotech customer base has once again moved to the forefront, we believe investors in the CRO sector may be better served to focus on companies with less customer concentration risk to hopefully reduce the potential for major swings in both quarterly bookings and sales. PRA seems to fit this bill with no customer accounting for more than 8% of sales (lowest in the industry). Indeed, PRA had a fairly consistent track record as a private company with quarterly book-to-bill ratios over the past few years, and we believe this should continue as a public company as well, thereby providing investors with comfort vs. other CROs”

Jefferies - Buy, $27 price target

“PRA's project-based and functional service solutions combined with the additive RPS client base offer significant cross-selling opportunities and the potential for accelerating revenue growth. Cost savings and IT initiatives also should deliver industry leading margin expansion, PRA management's strength. Thus, investors get the opportunity for industry leading EPS growth (17-19 percent) at an 18 percent discount to the peer group.”

Credit Suisse - Outperform, $27 price target

“We highlight the following investment positives: (1) favorable landscape for clinical CROs; (2) large & diversified client base; (3) levered to positive biotech environment & alternative, less-risky way to invest in biotech; (4) capital deployment & deleveraging could accelerate earnings growth profile; and (5) Embedded Solutions offers some differentiation & upsell opportunity.”