Quintiles reports strong Q4 results, expectations high for 2014
For the three months ending December 31, 2013, the company’s growth in service revenues, excluding the impact of foreign currency fluctuations, increased 7.7%, or $72.5m, compared to the same period last year. Adjusted income from operations for the year was $504.1m, representing growth of 13.2%.
“For 2014, we now project revenue of $4.11B, up $81m from our previous model and representing 7.9% growth,” analyst John Krieger of William Blair wrote in a note to investors. “The stand-out in the quarterly results, from our perspective, was the strong new business for” product development and IHS (integrated healthcare services).
The strong quarter marks a year in which Quintiles went public with a $1B IPO, purchased medical device CRO Novella for $146.5m, and crafted a major deal with Merck Serono. Investment analysts also remain largely positive on the CRO behemoth, which some say is driving CRO growth.
“As we move into 2014 and see these bookings translate into revenue, we believe burn rates remain consistent with recent levels, which would lead to revenue growth closer to the double-digit level absent the winding down of two large projects in 2013,” Krieger wrote.
The company most recently signed onto a Phase I diabetes study, which it will conduct for Kareus.
Phil Bridges, spokesman for Quintiles, told Outsourcing-Pharma.com that the announcement from Kareus is “an indication that our partnership has been a success. While we cannot talk specifically about our work for Kareus Therapeutics, we can say that this is an example of Quintiles’ ability to provide both strategic counsel and operational delivery.”
Quintiles shares rose $53 per share on Friday, which is up more than $13 pershare since the company went public at $40 a share last May.
“We believe the company's scale and lower risk profile justify a valuation more in line with or even slightly ahead of the group,” Krieger added. “We reiterate our Outperform rating on Quintiles as we believe that its industry-leading position should allow for more-predictable revenue and better visibility to double-digit earnings growth potential relative to its peers.”
Analyst Eric Coldwell of Robert W. Baird & Co. last week also raised his projections for Quintiles shares from $56 to $64. Wells Fargo Securities analyst Tim Evans, however noted one of the few down sides from the results as the company’s operating margin fell short of analysts’ predictions.
“We continue to see strong demand across all clinical phases of the pipeline with a greater interest in end-to-end integrated solutions underpinned with data analytics,” CEO Tom Pike said in the conference call on the results. “We are well positioned entering 2014 with the largest backlog in the industry at $9.9B which will fuel 2014 constant currency service revenue and earnings growth.”
