Why PAREXEL International Corp. Shares Sank

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PAREXEL International Corp. , a biopharmaceutical outsourcing services and consulting company, dipped as much as 18% after reporting its first-quarter earnings results last night after the closing bell.

So what: For the quarter, PAREXEL delivered nearly 14% revenue growth, to $529 million, with clinical research revenue still providing the bulk of its sales, at $332.6 million. Adjusted earnings of $0.45 also showed a marked increase (up 55%) from the previous year, meeting the Street's expectations. The reason PAREXEL is being creamed has to do with a major miss in new bookings, which totaled just $394 million versus expectations of more than $540 million. PAREXEL essentially left its fiscal 2014 guidance unchanged, calling for $1.95-$2.11 in EPS, and $1.89 billion to $1.92 billion in revenue.

Now what: This is a company that, on paper, should be absolutely raking in profits. Clinical outsourcing is the perfect way for big pharmaceutical and medical device companies to save money and time, especially with Obamacare rapidly transforming the health-care landscape. However, we're also seeing that tighter government spending is going to be a serious problem for PAREXEL. New orders for the company have fallen in five straight quarters according to Investors Business Daily, and that probably has a lot to do with austerity measures being implemented in the U.S. and Europe. With research grant money that's used to run clinical trials getting harder to come by, PAREXEL may find its top-line growth rate slowing, especially in its clinical research operations, which could put a damper on any potential for a rebound anytime soon.

Another incredible opportunity
PAREXEL's new order growth may be slowing, but this incredible tech stock is growing twice as fast as Google and Facebook, and more than three times as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!

The article Why PAREXEL International Corp. Shares Sank originally appeared on Fool.com.

Fool contributor  Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights  makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading