Parexel has raised its guidance for fiscal 2014 in a move that suggests the deals delayed in Q1 that spooked investors have started to come in.
According to an announcement yesterday, Parexel expects its book-to-bill ratio – equal to new business wins minus cancellations divided by service revenue – to be 1.3 in the quarter ended December 31, 2013. It also upped its full year revenue forecast by $5m (€3.6m).
The CRO did not give reasons for either the new book-to-bill ratio - which is higher than the 1.06 reported in the second quarter in 2012 – or higher revenue guidance, but did say it had been made ahead of its presentation at the JP Morgan Healthcare conference this week.
If accurate the new second quarter book-too-bill forecast suggests that Parexel has seen a marked increase in orders compared with the first quarter when it posted just $394m of new business wins, which is a ratio of 0.88.
The announcement of Parexel's first quarter order slow down prompted a 20% drop in the CROs share price, despite the fact that the contract research organisation (CRO) saw both revenue and margins increase in the quarter.
At the time CEO Josef von Rickenbach said second quarter orders were down due to “lower new business flow from some strategic partners, delayed client decisions with regard to some of our pending proposals, and a win rate that was lower than expected.”
Whether the new forecast means strategic customers like Pfizer have placed previously delayed orders at the second quarter is unclear, but the fact Parexel has chosen to issue the new guidance in itself suggests conditions have improved.