Parexel shares hit all-time high
Shares of Waltham's Parexel International Corp. rose to an all-time high yesterday after the company reported better-than-expected fiscal second-quarter earnings and revenue, driven by demand for its clinical research services.
The pharmaceutical services company's stock rose $7.37, or 14.7 percent, to close at $57.63 on the Nasdaq Stock Market, having hit a high of $58.38 earlier in the day. The stock has been trading near record highs all month. Previously, the stock traded between $30.19 and $54.88.
Parexel said after the close Wednesday that its fiscal second-quarter profit rose 26 percent and said it expects third-quarter profit growth on higher service revenue. Second-quarter revenue grew 32 percent and backlog rose 41 percent to just under $1.78 billion.
In a note to clients, Lehman Brothers analyst Douglas Tsao expressed strong enthusiasm about the company's results and raised his price target to $50 from $42.
"Only a surprisingly high tax rate prevented the quarter's result from being even better," said Tsao.
He also noted the volume of new business the company recorded after the first quarter's lackluster performance, saying, "We certainly expected improvement since the industry backdrop remains very good, but the magnitude of the improvement was impressive."
He has an "Equal weight" rating on the stock.
Parexel's strong results will likely restore investor confidence in the stock, Jefferies & Co. analyst David Windley said in a note to investors yesterday.
For the quarter, Parexel won $487 million in gross bookings, which exceeded Windley's estimate by $114 million.
In addition, Windley pointed out, "revenue growth has accelerated for several quarter now." And due to favorable foreign currency exchange rates, the company is also well-positioned to benefit from its high exposure to foreign regions.
Windley kept a "Buy" rating and $60 price target on Parexel. (AP)
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