A month has gone by since the last earnings report for PRA Health Sciences . Shares have added about 14.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PRA Health Sciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PRA Health's Q3 Earnings Beat, Direct Costs High
PRA Health posted third-quarter 2018 adjusted earnings per share of $1.13, which surpassed the Zacks Consensus Estimate of $1.08. Earnings per share rose 28.4% from the prior-year quarter. For investors’ notice, PRA Health Sciences witnessed an increase in direct costs this season, which included a favorable foreign currency effect of $6.1 million.
PRA Health registered revenues of $717.6 million in the third quarter, up 23.3% year over year. However, the figure missed the Zacks Consensus Estimate by 1.9%.
Q3 in Detail
Segmental Analysis
Net new business in the Clinical Research segment came in at $657.2 million in the third quarter. Through this segment, the company receives contracts from customers to provide clinical research services with payments based on fixed-fee or fee-for-service arrangements.
Revenues at the Data Solutions segment amounted to $60.6 million in the quarter under review. The company provides weekly, monthly or quarterly data reports and analytics to customers.
Direct Costs
Direct costs totaled $371.4 million in the quarter, 13.6% year over year.
At the Clinical Research segment, direct costs primarily consist of labor-related charges. Notably, labor-related costs rose $11.1 million in the segment.
At the Data Solutions segment, direct costs consist comprise data costs. The segment witnessed $29.4 million of incremental direct costs in the quarter.
Margin Trend
Gross profit, after excluding direct costs, came in at $346.2 million, up 35.7% from the prior-year quarter. Gross margin, as a percentage of revenues, came in at 48.2%, up 440 basis points (bps) year over year.
Net income from operations, after excluding selling, general and administrative expenses from gross profit, came in at $253.6 million, up 44.2% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, came in at 35.3%, up 510 bps.
Guidance
PRA Health reiterated 2018 revenue guidance at the range of $2.87-$2.92 billion, representing growth of 47-50%.
Moreover, the company raised earnings per share view. Adjusted earnings per share are expected between $4.22 and $4.27 compared with the previous range of $4.13 and $4.23.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, PRA Health Sciences has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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. It comes with little surprise PRA Health Sciences has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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PRA Health Sciences (PRAH) Up 14.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for PRA Health Sciences . Shares have added about 14.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PRA Health Sciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PRA Health's Q3 Earnings Beat, Direct Costs High
PRA Health posted third-quarter 2018 adjusted earnings per share of $1.13, which surpassed the Zacks Consensus Estimate of $1.08. Earnings per share rose 28.4% from the prior-year quarter. For investors’ notice, PRA Health Sciences witnessed an increase in direct costs this season, which included a favorable foreign currency effect of $6.1 million.
PRA Health registered revenues of $717.6 million in the third quarter, up 23.3% year over year. However, the figure missed the Zacks Consensus Estimate by 1.9%.
Q3 in Detail
Segmental Analysis
Net new business in the Clinical Research segment came in at $657.2 million in the third quarter. Through this segment, the company receives contracts from customers to provide clinical research services with payments based on fixed-fee or fee-for-service arrangements.
Revenues at the Data Solutions segment amounted to $60.6 million in the quarter under review. The company provides weekly, monthly or quarterly data reports and analytics to customers.
Direct Costs
Direct costs totaled $371.4 million in the quarter, 13.6% year over year.
At the Clinical Research segment, direct costs primarily consist of labor-related charges. Notably, labor-related costs rose $11.1 million in the segment.
At the Data Solutions segment, direct costs consist comprise data costs. The segment witnessed $29.4 million of incremental direct costs in the quarter.
Margin Trend
Gross profit, after excluding direct costs, came in at $346.2 million, up 35.7% from the prior-year quarter. Gross margin, as a percentage of revenues, came in at 48.2%, up 440 basis points (bps) year over year.
Net income from operations, after excluding selling, general and administrative expenses from gross profit, came in at $253.6 million, up 44.2% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, came in at 35.3%, up 510 bps.
Guidance
PRA Health reiterated 2018 revenue guidance at the range of $2.87-$2.92 billion, representing growth of 47-50%.
Moreover, the company raised earnings per share view. Adjusted earnings per share are expected between $4.22 and $4.27 compared with the previous range of $4.13 and $4.23.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, PRA Health Sciences has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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. It comes with little surprise PRA Health Sciences has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.