PAREXEL Raised to Buy - Analyst Blog

On March 19, Zacks Investment Research upgraded PAREXEL International Corporation PRXL to a Zacks Rank #2 (Buy).

Why the Upgrade?

PAREXEL has been witnessing rising earnings estimates on the back of strong second-quarter fiscal 2014 (ended Dec 31, 2013) results and an enhanced guidance for fiscal 2014. Moreover, this MA-based biopharmaceuticals outsourcing services organization has delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 14.83%. The long-term expected earnings growth rate for this stock is 14.25%.   

PAREXEL reported second-quarter fiscal 2014 results on Jan 29. Adjusted earnings per share came in at 51 cents, surpassing the Zacks Consensus Estimate of 48 cents by 6.25% and the company's prior-year earnings by 24%.

Earnings were primarily aided by healthy top-line growth of 15.4% in the reported quarter, which was driven by $14 million in contributions from acquisitions. Also, a strong improvement of 220 basis points in the quarter's operating margin boosted earnings.   

Based on its progress, the company raised its adjusted earnings per share projection for fiscal 2014 to $2.01–$2.11 from $1.97–$2.11 projected earlier. Management also lifted its net sales guidance for the fiscal from $1.895-$1.925 billion to $1.920-$1.930 billion.

The Zacks Consensus Estimate for earnings for fiscal 2014 increased 1.5% to $2.05 per share as 8 of the 11 estimates were revised higher over the last 60 days, with no downward revisions. The current Zacks Consensus Estimate lies within the guidance range provided by PAREXEL. For fiscal 2015,  5 estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 0.4% to $2.42 per share.

Other Stocks to Consider

In the Medical Services space, ICON Public Limited Company ICLR, Envision Healthcare Holdings, Inc. EVHC and Quintiles Transnational Holdings Inc. Q are also performing well. All of these stocks hold a Zacks Rank #1 (Strong Buy).