PAREXEL's June 30 Investor Day Likely To Feature FY2017 Guidance

Baird Equity Research analysts believe Parexel International Corporation PRXL would likely to take advantage of the Investor Day on June 30 to express their opinion about the upcoming fiscal year 2017 and the possible target. The brokerage maintained its Outperform rating and $73 price target.

The analysts think Parexel's EPS growth and margin expansion are on track despite the revenue visibility being lower in the near-term than several items by pointing out trial complexity and the recent cancellations.

In a research note, Baird said, "After four consecutive years of initial guidance upside, FY16's guidance was modestly below expectations. PRXL typically provides a ~10% EPS range. - We expect to hear: Revenue modestly below Street 4Q16 and 1H17, with acceleration in 2H17 – consensus revenue probably "in the range" but phasing not perfect; EPS guidance in the ballpark of $3.70-$4.10."

The brokerage thinks the market backdrop is mostly in favor of the Parexel side. Baird sees the positive influences entering the sixth year now in this cyclical expansion. The analysts believe there are no changes and that the drivers included continued R&D budgets growth in both the small, as well as big accounts, higher reliance on CRO partners apart from a positive influences such as automation, off-shoring, and currency.

The analysts concluded, "Given average 10-15 year lifecycles for development, ever-expanding testing requirements, and the glacial pace of change, we think PRXL's solution set will be viable for decades to come. Considering the breadth of PRXL's global client base – we estimate the total market opportunity is easily $45B."