INC Research Upgraded To Strong Buy On Estimate Revision

On Aug 27, Zacks Investment Research raised INC Research Holdings Inc. (NASDAQ:INCR) to a Zacks Rank #1 (Strong Buy) on upward estimate revisions.

Why the Upgrade?

The upgrade was primarily driven by upward estimate revisions over the last 30 days.

The Zacks Consensus Estimate for full-year 2016 is currently pegged at $2.32 per share, which moved up six cents over the same time frame, as all the seven analysts revised their estimates upward.

Meanwhile, the Zacks Consensus Estimate for full-year 2017 has been revised upward by 4.7% (12 cents) to the present $2.70 per share, as all the five analysts raised their projections.

Key Growth Factors

The estimate revisions were primarily driven by INC Research’s strong second-quarter 2016 results. The company’s adjusted earnings of 57 cents per share outpaced the Zacks Consensus Estimate by four cents (7.6%).

Net service revenues increased 13.8% on a year-over-year basis to $258.8 million; driven by strong growth across central nervous system (CNS), oncology and other complex therapeutic areas.

INC Research noted backlog of $1.9 billion, up 13.9% from the year-ago quarter. Net new business awards were $302.1 million, representing a book-to-bill ratio of 1.2 times.

INC research also announced a share buyback program worth $150 million. Recently, the company bought back 1,500,000 shares related to a secondary offering (roughly 4,500,000 shares) by existing stockholders, namely affiliates of Avista Capital Partners, L.P. and affiliates of Ontario Teachers’ Pension Plan.

INC Research updated its full-year 2016 guidance. The company now forecasts net service revenues to be in the range of $1.03 million to $1.04 million, up from the previous guidance of $1.02 million to $1.03 million.

Adjusted earnings are estimated to be in the range of $2.39 to $2.50 per share, up from earlier guidance of $2.34 to $2.46.

Other Stocks to Consider

Other favorably ranked stocks include Advisory Board (NASDAQ:ABCO) , Masimo (NASDAQ:MASI) and Natus Medical (NASDAQ:BABY) . All the three stocks sport a Zacks Rank #1.