It has been about a month since the last earnings report for Syneos Health . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Syneos Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Syneos Health Q1 Earnings Beat Estimates

Syneos Healthreported first-quarter 2023 adjusted earnings per share of 75 cents, which exceeded the Zacks Consensus Estimate by 11.9%. However, the metric declined 25.7% from the year-ago figure.

The GAAP diluted loss was 70 cents per share compared to the GAAP EPS of 44 cents in the prior-year quarter.

Revenues in Detail

Revenues in the quarter totaled $1.36 billion. The top line was up 1.5% year over year on a reported basis (up 2.4% at the constant exchange rate or CER). It exceeded the Zacks Consensus Estimate by 6.3%.

Segmental Details

The Clinical Solutions segment recorded revenues of $1.01 billion in the first quarter, down 0.5% year over year on a reported basis and up 0.2% at CER.

Commercial Solutions revenues were $343.1 million in the reported quarter, up 7.9% year over year and 9.4% at CER.

Margin Details

Direct costs (excluding depreciation and amortization) rose 4.2% to $1.09 billion in the quarter. The gross margin contracted 207 basis points (bps) to 19.8%.

SG&A expenses increased 15.2% year over year to $161.5 million.

The adjusted operating margin (excluding depreciation, amortization and restructuring and other expenses) contracted 348 bps from the year-ago quarter to 7.9%.

Financial Details

Syneos Health exited the first quarter of 2023 with cash and cash equivalents and restricted cash of $111.1 million compared with $112 million at the end of 2022. The long-term debt at the end of the first quarter was $2.61 billion, almost similar to the reported figure at the end of 2022.

In the first quarter of 2023, SYNH did not repurchase any common stock. The company still has $350 million available for share repurchase under its current plan.

The cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $30.4 million compared with $70.9 million in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Syneos Health has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Syneos Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Syneos Health belongs to the Zacks Medical Info Systems industry. Another stock from the same industry, Inspire Medical Systems (INSP Quick QuoteINSP - Free Report) , has gained 6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Inspire reported revenues of $127.9 million in the last reported quarter, representing a year-over-year change of +84.4%. EPS of -$0.53 for the same period compares with -$0.61 a year ago.

For the current quarter, Inspire is expected to post a loss of $0.51 per share, indicating a change of +3.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Inspire. Also, the stock has a VGM Score of C.