In the past week two analysts have raised their targets for Parexel in response to share price gains and indications it can realise the potential its backlog represents. The positive outlook for 2012 is based, in part, on the way Parexel has transferred work from Pfizer since inking the deal in May.
“We believe that projects are progressing remarkably close to the initial plan, with the company on track to hit a $50m (€37m) quarterly run-rate in the second half of calendar 2012”, Sandy Draper, equity analyst at Raymond James, wrote.
Hitting the target will see Parexel make better use of the hires it made to handle the anticipated uptick in business. Better staff use should help margins and Draper thinks Parexel has changed its approach to accelerate the improvement.
“We believe that Parexel has become more selective in its competitive approach to smaller transactional work, refusing to meet smaller competitors on price in order to preserve margins”, Draper wrote.
Analysts also picked up on the potential for growth at Perceptive Informatics, with Eric Coldwell, equity analyst at RW Baird, writing that it is benefiting from the “natural market shift to more “tech-enabled” trials and continued growth in medical imaging and randomisation”.
The unit also plays a role in partnerships. Speaking to Outsourcing-Pharma earlier this month, Mark Goldberg, chief operating officer at Parexel, said the CRO is leveraging eClinical assets at Perceptive Informatics in its partnerships.
Draper also noted the partnership angle, writing: “We view the company as competitively differentiated in terms of its in-house clinical technologies, which should help the company continue to support healthy bookings levels and present attractive future strategic partnership opportunities.”