Credit Suisse Sets New Outperform Rating, $75 Target On PAREXEL

With PAREXEL International Corporation’s PRXL shares down 16 percent year-to-date, Credit Suisse’s Erin Wilson views the stock valuation as attractive.

Wilson initiated coverage of the company with an Outperform rating and price target of $75.

Industry Leading Growth

The analyst expects the company’s “scale in a robust industry backdrop, comprehensive suite of services, differentiated technology offering, meaningful profit margin leverage opportunity, and capital deployment optionality” to drive “high-single digit organic revenue growth and double digit EPS growth long term ahead of the industry.”

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With robust tailwinds in the contract research organization (CRO) industry, Wilson expects PAREXEL International to benefit, given its leading scale and size, despite the recent weakness in backlog conversion.

Competitive Advantage

“We see competitive advantages in a broad global presence and extensive suite of services, including more profitable informatics and consulting businesses that have shown recent strength,” the analyst said.

In addition, Wilson believes the company’s efficiency initiatives would drive operating margin expansion of 100-120 bps annually, which is being underappreciated by the market.

PAREXEL International also generates robust cash flow, which is expected to support continued M&A activity, which in turn would further drive growth.