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Why Is PRA Health Sciences (PRAH) Down 39.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for PRA Health Sciences (PRAH - Free Report) . Shares have lost about 39.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PRA Health Sciences due for a breakout? 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 Q4 Earnings Beat Estimates, 2020 Guidance Solid
 
PRAH Health reported fourth-quarter 2019 adjusted EPS of $1.54, which outpaced the Zacks Consensus Estimate of $1.48. The bottom line rose 17.6% from the prior-year quarter tally.
 
The company registered revenues of $800.2 million in the quarter under review, up 10% year over year and 10.2% at cc. The figure also surpassed the consensus estimate of $794 million.
 
Results in Detail
 
Segmental Analysis
 
Net new business at the Clinical Research segment came in at $658.9 million. Through the segment, the company receives contracts to provide clinical research services with payments based on fixed-fee or fee-for-service arrangements.
 
Revenues at the Clinical Research segment and Data Solutions segment amounted to $725.1 million and $75.1 million, respectively. The company provides weekly, monthly or quarterly data reports and analytics to customers.
 
Direct Costs
 
Direct costs totaled $386.1 million in the quarter, up 5.6% year over year. Per management, the increase was primarily driven by a rise in labor-related costs at the Clinical Research and Data Solutions segment.
 
Margin Trend
 
Operating profit in the quarter grossed $101.4 million, up 4.8% from the year-ago quarter. Operating margin in the quarter was 12.7%, down 60 basis points.
 
Financial Update
 
Cash and cash equivalents came in at $236.2 million, up from $144.2 million at 2018-end.
 
Guidance
 
For 2020, PRA Health expects revenues within $3.23-$3.36 billion, indicating growth of 5-9.5% at cc.
 
Adjusted EPS is expected within $5.77-$5.97, suggesting a rise of 12-15% at cc.
 
For the first quarter, PRA Health expects revenues within $765-$787 million, suggesting an upside of 6-9% at cc. Adjusted EPS is projected between $1.05 and $1.15.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -21.64% due to these changes.

VGM Scores

At this time, PRA Health Sciences has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise PRA Health Sciences has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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