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Reasons to Hold on to Syneos Health (SYNH) Stock For Now

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Syneos Health, Inc. (SYNH - Free Report) is well poised for growth in the coming quarters, backed by expansion through strategic partnerships and gradual recovery in business with improvement in the pace of both patient enrollment and start of new clinical trials. However, decline in reimbursable out-of-pocket expenses amid the pandemic is a major concern.

Over the past year, this currently Zacks Rank #3 (Hold) stock has rallied 112% compared with 66.6% growth of the industry and the S&P 500’s 62.3% surge.

The renowned global biopharmaceutical solutions player has a market capitalization of $7.98 billion. It projects 15.4% growth for the next year and expects to witness ongoing business recovery. The company surpassed estimates in three of the trailing four quarters and broke even in one, the average surprise being 11.52%.

Let’s delve deeper.

Partnerships to Add Value: We are optimistic about Syneos Health’s progress with its partnership deals. The company entered into a strategic partnership with Science 37 this month to facilitate improved decentralized clinical trial delivery. Syneos Health announced a strategic partnership with software solutions provider, Protocol First, Inc., in February 2021, which is aimed at driving faster and more efficient clinical trials.

Syneos Health, in December 2020, announced a strategic collaboration with well-known oncology Real World Evidence and patient outcomes solutions provider for the biopharmaceutical and healthcare industries, ConcertAI, to accelerate and streamline the implementation of novel oncology clinical trial research and study designs.

Rebound in Clinical Services Arm: We are upbeat about Syneos Health’s impressive sequential improvement in the segmental performance amid the pandemic-led business disruptions. The segment also posted a solid fourth quarter of net awards, registering strong growth year over year.

Further, the company has been witnessing continued improvement in the pace of both patient enrollment and commencement of new clinical trials. Also, Clinical FSP business has remained resilient and recorded year-over-year revenue growth.

Strong Q4 Results: We are upbeat about Syneos Health’s fourth-quarter 2020 results. Its top-line growth in the quarter despite business disruptions is impressive. Sequential revenue growth in both the operating segments was observed in the reported quarter. Ongoing business recovery also looks encouraging. Expansion of both margins bodes well. The company has increased its revenue guidance for 2021, which instills investors’ confidence.

It won 80 COVID-19 related projects through the end of the fourth quarter and still has a substantial pipeline of additional COVID-19-related opportunities.

Downsides

Stiff Competition: Syneos Health’s operation in a highly competitive industry may induce headwinds, which include large and smaller specialty Contract Research Organizations, large global communications holding companies, smaller specialized communications agencies, contract sales organizations and a wide range of consulting companies.

Strict Regulatory Environment: The biopharmaceutical industry is controlled by very stringent governmental regulations in both domestic and global markets. If the company fails to perform its services in accordance with the regulatory requirements, it could be subject to significant costs or liability along with jeopardizing its reputation.

Estimate Trend

Syneos Health has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its current-year earnings has moved 0.5% north to $4.23.

The Zacks Consensus Estimate for first-quarter 2021 revenues is pegged at $1.19 billion, suggesting an improvement of 2% from the year-ago reported number.

Key Picks

Some other better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Align Technology, Inc. (ALGN - Free Report) .

Haemonetics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2.

Align Technology’s long-term earnings growth rate is estimated at 19.8%. It currently sports a Zacks Rank #1.

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