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Here's Why You Should Hold on to Syneos Health (SYNH) for Now
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Syneos Health, Inc. has been gaining from strategic partnerships and robust segmental performance. The company ended the third quarter of 2021 with better-than-expected results. The commercialization of Syneos One end-to-end product development offering’s portfolio assets in the reported quarter buoys optimism. The raised earnings per share (EPS) guidance for 2021 raises investor confidence. However, escalating expenses and a strict regulatory scenario do not bode well.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 52.2% compared with the 35% decline of the industry and the 32.4% rise of the S&P 500.
The renowned provider of biopharmaceutical outsourcing solutions has a market capitalization of $10.49 billion. Its earnings for third-quarter 2021 surpassed the Zacks Consensus Estimate by 3.4%.
Over the past five years, the company’s earnings have registered 10.9% growth, ahead of the industry’s 6.1% rise and the S&P 500’s 2.8% increase. The expected growth rate for the next year is estimated at 16.6%, compared with the industry’s growth expectation of 10% and the S&P 500’s estimated 9.5% growth for next year.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Syneos Health exited the third quarter of 2021 with better-than-expected earnings and revenues. Robust performance across the Clinical Solutions and Commercial Solutions segments is encouraging. The increased reimbursable expenses and strength in consulting drove the top line in the Commercial Solutions arm. Further, the company has raised its EPS guidance for 2021 to reflect lower-than-expected interest expense and depreciation.
Syneos One Holds Potential: Syneos Health initiated the commercialization of Syneos One end-to-end product development offering’s portfolio assets in the third quarter of 2021. The first commercial launch among the 23 assets currently managed by the Syneos One team in the reported quarter raises optimism. The company also began planning two additional Syneos One commercial launches, which are expected to occur in the first half of 2022, subject to final regulatory approval.
Partnerships to Add Value: Syneos Health has been progressing well with its partnership deals. We are upbeat about Syneos Health’s strategic partnership with Ride Health in September 2021 to provide clinical trial participants with non-emergency medical transportation. In July 2021, the company partnered with Aetion to provide regulatory-grade data and analytics-driven solutions to advance drug development and improve patient outcomes. Other notable partnerships include the ones with Komodo Health, Medable, Science 37 and Protocol First, Inc.
Downsides
Escalating Expenses: During the third quarter, Syneos Health’s selling, general and administrative (SG&A) expenses climbed 18.2% year over year. The mounting costs and operating expenses are building significant pressure on the company’s bottom line, leading to margin contractions in the reported quarter.
Strict Regulatory Environment: The biopharmaceutical industry is governed by extremely stringent governmental regulations in both domestic and global markets. Within Syneos Health’s Clinical Solutions business, the FDA regulates the clinical trials of drug products in human enrollments, the form, and content of regulatory applications. Globally, clinical trials are governed by the laws and regulations of the country where these are conducted.
Economic Uncertainty: Syneos Health’s business largely depends on global economic conditions. Weaker global economic conditions may lead to reduced demand for the company’s products, increased competition, pressure on prices, declining supply and a lengthier sales cycle. Furthermore, Syneos Health is exposed to the risk of political unrest, as the present situation in the Middle East.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Syneos Health’s 2021 EPS has moved 1.4% north to $4.41.
The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $1.4 billion, suggesting a 23.2% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Omnicell, Inc. (OMCL - Free Report) and NextGen Healthcare, Inc. .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 19.5%.You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 94% against the industry’s 47.5% fall.
Omnicell, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 17.4%, on average.
Omnicell has outperformed its industry over the past year. OMCL has gained 71.3% against the 35% industry decline.
NextGen, sporting a Zacks Rank #2, has a long-term earnings growth rate of 8.5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 16%.
NextGen has outperformed the industry it belongs to in the past year. NXGN has declined 0.4% versus the industry’s 35% fall.
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Here's Why You Should Hold on to Syneos Health (SYNH) for Now
Syneos Health, Inc. has been gaining from strategic partnerships and robust segmental performance. The company ended the third quarter of 2021 with better-than-expected results. The commercialization of Syneos One end-to-end product development offering’s portfolio assets in the reported quarter buoys optimism. The raised earnings per share (EPS) guidance for 2021 raises investor confidence. However, escalating expenses and a strict regulatory scenario do not bode well.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 52.2% compared with the 35% decline of the industry and the 32.4% rise of the S&P 500.
The renowned provider of biopharmaceutical outsourcing solutions has a market capitalization of $10.49 billion. Its earnings for third-quarter 2021 surpassed the Zacks Consensus Estimate by 3.4%.
Over the past five years, the company’s earnings have registered 10.9% growth, ahead of the industry’s 6.1% rise and the S&P 500’s 2.8% increase. The expected growth rate for the next year is estimated at 16.6%, compared with the industry’s growth expectation of 10% and the S&P 500’s estimated 9.5% growth for next year.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Syneos Health exited the third quarter of 2021 with better-than-expected earnings and revenues. Robust performance across the Clinical Solutions and Commercial Solutions segments is encouraging. The increased reimbursable expenses and strength in consulting drove the top line in the Commercial Solutions arm. Further, the company has raised its EPS guidance for 2021 to reflect lower-than-expected interest expense and depreciation.
Syneos One Holds Potential: Syneos Health initiated the commercialization of Syneos One end-to-end product development offering’s portfolio assets in the third quarter of 2021. The first commercial launch among the 23 assets currently managed by the Syneos One team in the reported quarter raises optimism. The company also began planning two additional Syneos One commercial launches, which are expected to occur in the first half of 2022, subject to final regulatory approval.
Partnerships to Add Value: Syneos Health has been progressing well with its partnership deals. We are upbeat about Syneos Health’s strategic partnership with Ride Health in September 2021 to provide clinical trial participants with non-emergency medical transportation. In July 2021, the company partnered with Aetion to provide regulatory-grade data and analytics-driven solutions to advance drug development and improve patient outcomes. Other notable partnerships include the ones with Komodo Health, Medable, Science 37 and Protocol First, Inc.
Downsides
Escalating Expenses: During the third quarter, Syneos Health’s selling, general and administrative (SG&A) expenses climbed 18.2% year over year. The mounting costs and operating expenses are building significant pressure on the company’s bottom line, leading to margin contractions in the reported quarter.
Strict Regulatory Environment: The biopharmaceutical industry is governed by extremely stringent governmental regulations in both domestic and global markets. Within Syneos Health’s Clinical Solutions business, the FDA regulates the clinical trials of drug products in human enrollments, the form, and content of regulatory applications. Globally, clinical trials are governed by the laws and regulations of the country where these are conducted.
Economic Uncertainty: Syneos Health’s business largely depends on global economic conditions. Weaker global economic conditions may lead to reduced demand for the company’s products, increased competition, pressure on prices, declining supply and a lengthier sales cycle. Furthermore, Syneos Health is exposed to the risk of political unrest, as the present situation in the Middle East.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Syneos Health’s 2021 EPS has moved 1.4% north to $4.41.
The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $1.4 billion, suggesting a 23.2% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Omnicell, Inc. (OMCL - Free Report) and NextGen Healthcare, Inc. .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 19.5%.You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 94% against the industry’s 47.5% fall.
Omnicell, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 16%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 17.4%, on average.
Omnicell has outperformed its industry over the past year. OMCL has gained 71.3% against the 35% industry decline.
NextGen, sporting a Zacks Rank #2, has a long-term earnings growth rate of 8.5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 16%.
NextGen has outperformed the industry it belongs to in the past year. NXGN has declined 0.4% versus the industry’s 35% fall.