Wells Fargo Resumes Coverage on PAREXEL International (PRXL) at Market Perform; Uncertainty Around Partnerships Continues

Wells Fargo resumes coverage on PAREXEL International (NASDAQ: PRXL) with a Market Perform. PT range $20-$21.

Wells analyst says, "Our checks indicate that PRXL’s commitment to differentiating itself has paid off. The company has one of the most geographically diverse footprints in the industry, has built one of the industry’s leading eClinical suites, and has the resources of a strong consulting business. The company's offerings have caught the attention of numerous sponsors interested in partnerships as evidenced by the 58% increase in the company's backlog since the end of FY2009. Our Market Perform rating hinges almost exclusively on margin. PRXL has posted the lowest operating margin among the public peer group in each of the last ten years, which has depressed its return on invested capital (ROIC) and its free cash flow (FCF). The company has several initiatives under way to improve the margin, but we question whether it will be enough to offset what appear to be stiff headwinds from large partnerships...We set our FY2012 and FY2013 EPS estimates at $1.10 and $1.53, respectively."

For more ratings news on PAREXEL International click here and for the rating history of PAREXEL International click here.

Shares of PAREXEL International closed at $19.02 yesterday.

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