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PRA Health Sciences Inc PRAH

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

PRA Reports Solid Q1 Results and Strong New Business; Continuing to Recover From Pandemic Challenges

Rachel Elfman Equity Analyst

Analyst Note

| Rachel Elfman |

Narrow-moat PRA Health Sciences reported first-quarter revenue of $933 million, representing 19% growth from the prior-year period. Adjusted EBITDA was nearly $136 million for the quarter, up over 21% year over year. We maintain our fair value estimate of $166 per share, which is Icon's takeover price per its announced acquisition agreement of PRA. The deal is expected to close in the third quarter of 2021. However, based on our DCF model, we continue to view shares as overvalued as the stock is currently trading at a 90% premium to our stand-alone fair value estimate of $88. PRA's shares have increased considerably, about 30%, since the acquisition was announced at the end of February.

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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. PRA's competitor, Icon, announced it will acquire PRA for $12 billion, which is scheduled to close in third-quarter 2021.

Contact
4130 ParkLake Avenue, Suite 400
Raleigh, NC, 27612
T +1 919 786-8200
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 17,500