Wells Fargo Downgrades Pharmaceutical Product Development (PPDI) from Outperform
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Wells Fargo downgrades Pharmaceutical Product Development (Nasdaq: PPDI) from Outperform to Market Perform. Lowers valuation range to $21-23 from $26-27.
Wells analyst says, "We are downgrading PPD to Market Perform based on continued softness in gross bookings, declining core earnings power, and the company's use of cash. Despite mgmt's positive commentary about improving clinical RFP flows, we do not believe gross bookings will improve over the next several quarters. In our view, sales cycles to pharma sponsors are lengthening and higher clinical RFP flows may be inflated by "ballpark" RFP activity. We are lowering our EPS ests for 2009 and 2010 to $1.20 and $1.22 (excludes potential $0.07 pro-rata benefit from Discovery unit spin-off), from $1.36 and $1.37, respectively...Our Market Perform rating is based our forecast of flat earnings growth over the foreseeable future. We do believe PPD is run by a best-of-breed management team, has large global scale and breadth of therapeutic expertise, and a sound capital structure."
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