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Syneos Health (SYNH) Hurt by Low Reimbursable Expense, FX Issue
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Syneos Health operates in a strict regulatory environment, which is a concern. Also, a tough competitive landscape is a major threat. The stock has a Zacks Rank #5 (Strong Sell).
Syneos Health ended the third quarter of 2022 with lower-than-expected earnings and revenues. In Clinical Solutions, revenues declined due to reimbursable expenses and the impact of foreign exchange. Backlog conversion delays and lower revenues from COVID-related projects affected year-over-year revenue growth at CER.
The company slashed its revenue and EPS view for 2022 to reflect the impact of lower net new business awards, delays in backlog conversion and customer delays in its FSP business within Clinical Solutions, along with the impact of FX fluctuations.
The company now expects full-year revenues in the range of $5,300-$5,360 million (down from the previous guidance of $5,440-$5,540). Adjusted EPS for the year is projected in the band of $4.69-$4.87 (previous guidance was $4.97-$5.11).
Lower reimbursable expenses and foreign exchange headwinds continue to challenge business performance.
The company also experienced delays in large pharma award decisions, with net awards being impacted by greater-than-normal delays. Also, the company slashed its revenue and earnings per share view for 2022.
On a positive note, during the third quarter, Syneos Health’s Commercial Solutions revenue growth was strong, primarily driven by deployment solutions, including the contribution from its Syneos One portfolio and higher reimbursable expenses. The expansion of margins bodes well. A strong backlog growth is an added upside.
During the reported quarter, the company had a robust net new business, including reimbursable out-of-pocket expenses, which resulted in a solid book-to-bill ratio of 0.3 for Clinical Solutions. Strong solvency with a moderately leveraged balance sheet is another upside.
Syneos Health has outperformed its industry over the past year. The stock has plunged 65.6% compared with the industry’s 67.9% decline.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Syneos Health (SYNH) Hurt by Low Reimbursable Expense, FX Issue
Syneos Health operates in a strict regulatory environment, which is a concern. Also, a tough competitive landscape is a major threat. The stock has a Zacks Rank #5 (Strong Sell).
Syneos Health ended the third quarter of 2022 with lower-than-expected earnings and revenues. In Clinical Solutions, revenues declined due to reimbursable expenses and the impact of foreign exchange. Backlog conversion delays and lower revenues from COVID-related projects affected year-over-year revenue growth at CER.
The company slashed its revenue and EPS view for 2022 to reflect the impact of lower net new business awards, delays in backlog conversion and customer delays in its FSP business within Clinical Solutions, along with the impact of FX fluctuations.
The company now expects full-year revenues in the range of $5,300-$5,360 million (down from the previous guidance of $5,440-$5,540). Adjusted EPS for the year is projected in the band of $4.69-$4.87 (previous guidance was $4.97-$5.11).
Syneos Health, Inc. Price
Syneos Health, Inc. price | Syneos Health, Inc. Quote
Lower reimbursable expenses and foreign exchange headwinds continue to challenge business performance.
The company also experienced delays in large pharma award decisions, with net awards being impacted by greater-than-normal delays. Also, the company slashed its revenue and earnings per share view for 2022.
On a positive note, during the third quarter, Syneos Health’s Commercial Solutions revenue growth was strong, primarily driven by deployment solutions, including the contribution from its Syneos One portfolio and higher reimbursable expenses. The expansion of margins bodes well. A strong backlog growth is an added upside.
During the reported quarter, the company had a robust net new business, including reimbursable out-of-pocket expenses, which resulted in a solid book-to-bill ratio of 0.3 for Clinical Solutions. Strong solvency with a moderately leveraged balance sheet is another upside.
Syneos Health has outperformed its industry over the past year. The stock has plunged 65.6% compared with the industry’s 67.9% decline.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.