PAREXEL's Investment Day Leaves Citi Energized

The brokerage said the company on its investor day, made encouraging comments on its near-term views including book-to-bill ratios and seeing very healthy end markets, possibly two factors that may have held back investors.

"Further, encouraging commentary on recent client renewals, along with guidance from earlier today that was largely favorable on low expectations, should support shares to the upside," analyst Garen Sarafian wrote in a note.

Sarafian, who maintains a Buy rating on the shares, cut 2016 EPS estimate by $0.01 to $3.42 and 2017 EPS view by $0.05 to $3.95.

Among the key takeaways, the company's Margin Acceleration Program (MAP) remains on track, with slightly higher charges stated to be the result of additional opportunities added into its scope of work but contributing to results.

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

Consequently, the company now expects $30 million in annual pre-tax run rate savings versus the targeted $20 million–$30 million.

"The company has increased adj. operating margins to 13.3 percent at March-end 2016 for a 250 bps basis points, a 100–120 bps margin expansion in FY2017 towards its 14–16 percent margin targets seems reasonable given it remains well below peers in the high teens/low twenties," the analyst added.

PAREXEL closed Friday's regular trading session up 0.94 percent on the day at $63.47. Sarafian also raised the price target by $2 to $74.