KeyBanc Expecting PRA Health Sciences To Beat Estimates, Upgrades To Overweight

"By our models, the strength of PRAH's backlog (up 16 percent YOY) and bookings (1.25xR4Q) sets up for above-consensus performance," analyst Donald Hooker wrote in a note.

Hooker expects constant currency revenue growth of 13.8 percent in 2016 (consensus: 12.7 percent) and 10.9 percent in 2017 (consensus: 9.5 percent), which should boost profit margins. The analyst forecast 2016 EPS of $2.46 (consensus: $2.43), and 2017 EPS of $2.96 (consensus: $2.82).

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Even assuming a modest slowdown in backlog conversion, we think revenues should come in toward the high end of management's 2016 guidance with significant backlog left over for a strong 2017 and 2018," Hooker highlighted.

Other Expectations For PRA Health

The analyst also models EBITDA growth of almost 13 percent in 2017, which is well above the peer group average about 10 percent.

In addition, the analyst noted that investors under appreciate the bookings strength from PRA Health's investments in analytics that include Predictivv cloud-based technology platform and its recent acquisition of Nextrials, an electric data capture (EDC) vendor.

Hooker said, "Management has been developing retroactive and predictive algorithms over the past eight years, and we believe this work may now be starting to show up in bookings."

"[M]anagement has recently addressed PRAH's indebtedness and ownership concentration, which reduces two of the largest overhangs on the shares, in our view," Hooker added.

At the time of writing, shares of PRA Health were down 1.22 percent to $44.68. The analyst has a price target of $55 on the stock.