Parexel shares rise on strong 2009 forecast

Shares of Parexel International Corp. jumped today after the clinical research services provider lifted its outlook for 2008 services revenue and forecast 2009 profit above Wall Street expectations.

Waltham-based Parexel issued the guidance late yesterday ahead of its investor day today in Boston. Shares rose $1.33, or 5.6 percent, to $25.03 in midday trading on the Nasdaq Stock Market.

Parexel helps companies bring experimental medications and medical devices to market by running clinical trials and clearing regulatory hurdles. The company now expects services revenue between $950 million and $957 million, up from a prior low-end of $947 million. Fiscal 2009 profit is forecast between $1.10 and $1.20 per share, compared with analysts' average estimate of $1.08, according to Thomson Financial.

Jefferies & Co. analyst David Windley said the estimates look attractive but conservative. He said backlog growth in recent quarters has been very strong, which should support continued solid revenue growth.

Most analysts remained neutral on the stock in the wake of Parexel's forecast, noting that the estimates don't include any impact from the potential acquisition of ClinPhone, which is expected to close in September. Parexel is paying $182 million for the British provider of services for drug clinical trials.

Robert W. Baird analyst Eric Coldwell said if not for the overhang of possible earnings dilution expected from the ClinPhone deal, he would be inclined to raise his 2009 profit estimates, especially since Parexel has beat Wall Street forecasts in 10 of the last 11 quarters and regularly boosts guidance.

"Instead, we are opting to maintain our current estimates under the expectation that our conservatism, and potential conservatism in PRXL's core business outlook will absorb ClinPhone dilution if, and when, the deal closes," he wrote in a note to clients. "Among late-stage clinical research organizations we continue to prefer Icon PLC because we believe there are fewer unresolved issues." (AP)