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.