Parexel shares down as concerns over low bookings remain
Bookings fell to $394m in Q1, which was down from $481m a year earlier, the company said. Baird & Co analysts said the bookings were about 30% below their expectations, according to Reuters.
Part of the issue may stem from Merck, which accounted for 12% of Parexel's consolidated service revenue in FY 2013, and which said earlier this month it would cut about 4,000 R&D jobs.
But Josef von Rickenbach in the conference call with analysts last week said that the fall off in bookings might just be the result of companies pushing back their bookings to the second quarter.
“Probably the single biggest factor that ultimately led to the lower bookings was the fact that a significant portion of the decisions for proposals moved out of the quarter into the second quarter. In fact, I'd say that's the single biggest contributing factor,” von Rickenbach said, according to a transcript of the call.
He added that “so far in the quarter, which is to say in October, we've had a relatively good success and a good win rate.”
Despite the question marks regarding competition, Parexel saw almost 14% revenue growth for the quarter compared to the previous year. Parexel also basically maintained its FY 2014 guidance, calling for $1.95-$2.11 in EPS, and $1.89 billion to $1.92 billion in revenue.
As far investor analysts, those at Robert W. Baird downgraded shares of Parexel while analysts at Sterne Agee reiterated an underperform rating, according to Ticker Report.
The report added that one investment analyst has rated the stock with a sell rating, seven have issued a hold rating, four have assigned a buy rating and one has assigned a strong buy rating. The stock presently has a consensus rating of “hold” and a consensus target price of $49.88.
Von Rickenbach also stressed that the company held its own among the smaller and emerging companies looking to outsource. “We have said many times that the awards from strategic clients can be somewhat lumpy…Finally, we actually had relatively good opportunities from small and emerging companies... In this particular quarter, that turned out to be particularly competitive and we held our line in terms of economics,” he said.
