Kendle follows peers with cut in ‘08 outlook

By Phil Taylor

- Last updated on GMT

Related tags United states dollar Revenue Clinical trial

Cincinatti, US-based clinical research organization Kendle has cut back its revenue expectations for 2008, primarily as a result of the strengthening of the US dollar, in common with some of its peers in the CRO sector.

The news bears out a recent research note on Kendle by Piper Jaffray, which said that the company is “exposed to foreign currency headwinds​” as it makes more than half of its revenues outside the US.

Kendle now expects full-year 2008 net service revenues to be in the range of $475m-$480m, down from its prior forecast of $485m to $500m made at the time of the firm’s third-quarter results statement. Analysts are expecting revenues of around $488m.

Earnings per share is also expected to be little softer, said Kendle, which is predicting a range of $2.12-$2.20, compared to prior guidance of $2.10-$2.25.

The CRO has shown spectacular growth in recent quarters – much of it organic rather than coming from M&A activity although Kendle did snap up CRO DecisionLine in mid-2008 as it tries to grow its early-stage clinical trials business.

Piper Jaffray started coverage of Kendle with a neutral rating, saying that the CRO’s relatively small size could stand against it and limit its access to “large, strategic outsourcing deals, which we believe will become more common among large pharma companies​.”

The announcement comes just a few days after rival CRO Icon plc lowered its own revenues forecasts, once again blaming currency factors, but hiked its earnings guidance.

Shares in Kendle slid 4 per cent on the news closing yesterday at $19.95, well down on their 52-week high of $52. The company plans to report its fourth-quarter and full-year results on February 25.

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