PAREXEL International (PRXL) Q4 Earnings Beat, Up Y/Y

PAREXEL International Corp (NASDAQ:PRXL) reported fourth-quarter fiscal 2016 adjusted earnings per share (EPS) of 94 cents, up a significant 19% year over year. The EPS figure also beat the Zacks Consensus Estimate by a couple of cents.

The total revenue reported in the fourth quarter was $628 million which surpassed the year-ago quarter figure of $605 million by 3.7%.

The strong EPS performance was driven by a slight improvement in revenues and the company’s Margin Acceleration Program (MAP) which boosted its margins significantly.

However, the total revenue for fiscal 2016 was $2.43 billion, up 4.2% from fiscal 2015.

Quarter Details

Gross new business wins were $967 million, while net book-to-bill was 1.2.

Total service revenues increased 3% (2.6% on a constant currency basis) to $538.6 million on a year-over-year basis. The upside was driven by higher service and reimbursement revenues.

Clinical Research Services (CRS) service revenues dropped 2.7% to $407.9 million due to decline in revenues from post-approval interventional studies. Moreover, the sequential decline in the CRS gross margin was primarily due to increase in incentive compensation in the quarter.

PAREXEL Consulting (PC) service revenues climbed 59% from the year-ago quarter, driven by strong overall demand and the acquisition of Health Advances, while PAREXEL Informatics (PI) reported a rise of 7.1% led by its regulatory information management and medical imaging solutions, which performed particularly well.

Guidance

PAREXEL expects first-quarter fiscal 2017 revenues in the range of $520–$530 million. Adjusted earnings are projected in the band of 82–90 cents per share.

For full-year 2017, management anticipates annual savings of approximately $60 million. Going forward, the company’s adjusted operating margin is expected to expand to 120 basis points (bps), with the target range being 14% to 16% for the long term.

For fiscal 2017, management projects revenues in the band of $2.175--$2.205 billion. The adjusted EPS guidance is in the $3.79–$4.05 range.

PAREXEL expects to achieve 10% to 12% growth in revenue, 100 bps to 120 bps expansion in adjusted operating margin and 15% to 20% increase in EPS over the long haul.

Zacks Rank & Key Picks

PAREXEL currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same space include HealthEquity, Inc. (NASDAQ:HQY) , PRA Health Sciences, Inc. (NASDAQ:PRAH) and The Advisory Board Company (NASDAQ:ABCO) . While HealthEquity, Inc.and The Advisory Board Company sport a Zacks Rank #1 (Strong Buy), PRA Health Sciences, Inc. carries a Zacks Rank #2. (Buy).