A month has gone by since the last earnings report for Syneos Health (SYNH - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Syneos Health due for a pullback? 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 drivers.
Syneos Q1 Earnings Miss Estimates, Revenues In Line
Syneos Healthposted first-quarter 2019 adjusted earnings per share (EPS) of 59 cents, which missed the Zacks Consensus Estimate by 1.7%. However, the metric rose 7.3% from the year-ago tally.
Reported net loss per share came in at 29 cents, wider than the loss of 24 cents in the year-ago quarter.
Revenues in Detail
Service revenues in the quarter totaled $1.12 billion. The top line increased 5.8% year over year but was on par with the Zacks Consensus Estimate. Per management, revenue growth across key segments drove the top line.
The Clinical Solutions segment delivered service revenues of $805 million in the first quarter, up 2.3% year over year (up 4.1% at CER). The upside was led by net new business growth, partially offset by unfavorable revenue mix and adverse currency fluctuations.
Commercial Solutions service revenues came in at $314 million in the reported quarter, up 16.2% year over year (up 16.9% at CER). Net new business growth, favorable revenue mix, and the company’s buyout of Kinapse in the third quarter of 2018 drove Commercial Solutions service revenues.
Direct cost (excluding depreciation and amortization) increased 5.5% to $886.8 million in the quarter. Selling, general and administrative expenses rose 13.9% year over year to $113.1 million. Adjusted operating margin (excluding depreciation, amortization, transaction and integration-related and restructuring and other expenses) contracted 44 basis points from the year-ago quarter to 10.6%.
Syneos Health exited the first quarter of 2019 with cash, cash equivalents, and restricted cash of $107.9 million compared with $155.9 million at the end of 2018. Net cash used in operating activities at the end of the quarter was $13.3 million compared with cash outflow of $46.9 million a year ago.
For 2019, the company reaffirmed the adjusted service revenue guidance at $4.62-$4.73 billion. The Zacks Consensus Estimate is pegged at $4.68 billion, within the guided range.
For 2019, the company has reiterated its adjusted EPS guidance at the range of $3.03-$3.23. The Zacks Consensus Estimate for the same is pegged at $3.12, well within the guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Syneos Health has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Syneos Health has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.