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Analyst Blog

PAREXEL International Corporation (PRXL - Free Report) , a global biopharmaceutical services company and provider of clinical research and logistics, recently announced the signing of a definitive agreement to acquire ExecuPharm Inc., a King of Prussia, PA-based global functional-service provider, for an undisclosed sum. Notably, the acquisition is expected to close within the next three weeks.

Under the agreement, PAREXEL is expected to strengthen its existing functional services, leveraging on ExecuPharm’s strong client network and excellent ‘combination of programmatic and functional outsourcing models’. In this regard, ExecuPharm exclusively operates with the top, mid-sized and small biopharmaceutical companies and has enhanced its growth trajectory over the last three years.

Of the other recent notable developments, PAREXEL announced the appointment of Dr Christian Dreger as the new Senior Vice President of PAREXEL Access and PAREXEL Consulting. In fact, the company also declared the successful execution of a margin acceleration program (MAP) in the just-reported fourth quarter of 2016, designed to simplify the organizational structure of the firm and improve the labor-mix scenario within the company.

In our view, PAREXEL primarily aims to diversify its core business through this acquisition. In fact, the company is striving to come up with a single solution for all the clinical development outsourcing needs of clients by unifying the highly advanced tasks of clinical monitoring, data management, biostatistics, site monitoring, study management, medical writing and pharmacovigilance.

Our Take

Taking the growing awareness in the biopharmaceutical industry into consideration, we believe that the impending buyout will help PAREXEL tap into the bountiful opportunities, going ahead.

Meanwhile, the biopharmaceuticals market is forecasted to grow at a CAGR of 9.4% to reach a worth of $278 billion by 2020, per Persistence Market Research. We expect PAREXEL to gain significant traction in the biopharmaceutical and related ancillary markets, courtesy of the favorable trend and the takeover.

Key Picks

Better-ranked stocks in the broader medical sector include Biospecifics Technologies Corp. (BSTC - Free Report) , Corcept Therapeutics Incorporated (CORT - Free Report) and CryoLife Inc. (CRY - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Biospecifics Technologies has an impressive one-year return of 30.8%, better than the S&P 500’s 14% over the same time frame. Notably, the Zacks Consensus Estimate for fiscal 2016 earnings increased by 13 cents to $1.53 over the last two months.

Corcept Therapeutics posted a solid one-year return of 71.9%. Notably, the Zacks Consensus Estimate for fiscal 2016 earnings increased by a penny to 5 cents over the last two months.

CryoLifeposted a stellar earnings surprise of 502.5% for the last four quarters. This stock has a healthy one-year return of 84.6%.

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