PRA Health Hits A 52-Week High On Strategic Acquisitions

Leading global contract research organization PRA Health Sciences (NASDAQ:PRAH) rallied to a new 52-week high of $78.30 on Jun 21, closing a little lower at $77.21. This represents a strong year-to-date return of approximately 40.08%, better than the S&P 500’s 8.8%.

For the majority of the last three months, the company’s share price has outperformed the Zacks classified Medical Services sub-industry. The stock has rallied 75.9%, outshining the sub-industry’s gain of just 5%. Notably, the stock has a market cap of $4.7 billion.

Taking the stable performance of the stock into consideration, we expect PRA Health to gain more ground in the coming quarters. The company’s positive long-term growth of 19% also raises optimism.

The stock currently has a Zacks Rank #3 (Hold).

Growth Catalysts

Partnership with Jumo: PRA Health recently announced a partnership with Jumo, a global provider of educational health care information. With a solid background in conducting pediatric clinical trials, the tie-up is likely to bolster the company’s footprint in the niche space. Per management, PRA Health can leverage on Jumo’s solid education-information system to bridge the gap between caregivers and patients while conducting pediatric clinical trials.

We believe that the company can soon scale to the position of a single global resource unit that can cover all aspects of patient needs related to pediatric products.

The Center for Pediatric Clinical Development: In May, PRA Health announced an initiative to open a new development center to confront challenges in pediatric treatment. The Center for Pediatric Clinical Development is supported by a cross-functional group of experts to provide strategic pediatric product development, consulting, technical and operational services. This has created significant shareholder value for the company.

PRA Health Sciences, Inc. Price and Consensus

PRA Health Sciences, Inc. Price and Consensus | PRA Health Sciences, Inc. Quote

Strong Guidance: The company reaffirmed its full-year 2017 service revenue guidance at $1.795–$1.835 billion, representing constant currency growth of 14% to 16%.

Furthermore, adjusted net income per diluted share is forecasted between $3.08 and $3.18, and an annual effective income tax rate is estimated at approximately 27%.

Estimate Revisions: The estimate revision trend for the current year has been favorable. Over the last two months, three analysts moved north, compared to one movement in the opposite direction. As a result, the magnitude of the current year estimate inched 0.3% up to close at $3.05 over the same time frame.

Key Picks

Better-ranked stocks in the broader medical sector include Inogen Inc. (NASDAQ:INGN) , Luminex Corporation (NASDAQ:LMNX) and IDEXX Laboratories, Inc. (NASDAQ:IDXX) . Notably, Inogen and Luminex Laboratories sport a Zacks Rank #1 (Strong Buy), while IDEXX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 102.3%.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock posted a positive earnings surprise of 237.5% in the last reported quarter.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.37%. Additionally, the stock represents an impressive one-year return of 81.8%.

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