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PRA Health Sciences Inc PRAH

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Morningstar’s Analysis

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Intact $84 FVE for Narrow-Moat PRA Health After Another Quarter of Strong Clinical Trial Bookings

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

Narrow-moat PRA Health Sciences reported third-quarter revenue of $796.3 million, representing 2.0% growth and in line with our low-single-digit revenue growth expectations for 2020. Management also raised its full-year revenue guidance range to $3.120 billion to $3.150 billion. We are reaffirming our 2020 revenue guidance, which places us at the lower end of this range. Last quarter, we raised our fair value estimate and increased our revenue forecast to account for the company’s notable net new awards wins, which topped $700 million. Therefore, although we remain impressed by the company’s continued strong performance and resiliency this quarter, in which it grew its net new business revenue by 10%, we have already baked in this strong clinical research growth trajectory into our valuation. Accordingly, we are also maintaining our $84 fair value estimate, which leaves the stock trading in 2-star territory.

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Company Profile

Business Description

PRA Health Sciences is a global contract research organization that provides drug development and clinical trial services to pharmaceutical and biotechnology firms. Its services run from early- to late-stage clinical trial outsourcing with varying levels of support, including one-off specialized staffing services to strategic partnerships where PRA handles nearly all aspects of the trial. In 2017, PRA acquired Symphony Health, a healthcare data and analytics provider.

4130 ParkLake Avenue, Suite 400
Raleigh, NC, 27612
T +1 919 786-8200
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 17,500