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Biotech / Medical : PRXL - Parexel International -- Ignore unavailable to you. Want to Upgrade?

To: LoLoLoLita who wrote (15)	10/30/1998 1:00:00 AM
From: Jeffrey D	Respond to of 62

A shame it took a 40%+ drop to get some activity on this thread but at least it allowed me to buy back in at 21 3/4. Interesting Bloomberg story below. I really like the one paragraph about the analyst that lowered his rating on the company in the morning and then raised it again in the afternoon. He says "a $15 drop will do that." Yes, it will do that and it will also open my wallet. Nice to have company here. Jeff <<Parexel Shares Fall 42% on Warning of Slower Growth Boston, Oct. 29 (Bloomberg) -- Parexel International Corp. shares fell 42 percent after the contract-research company missed analysts' per-share earnings estimates by two cents and warned its growth will slow. Parexel, which performs clinical testing for biotechnology and pharmaceutical companies, fell 15 3/16 to 21 1/16 in trading of 16.6 million, more than 44 times the three-month daily average. It was the largest percentage decliner on U.S. exchanges, and the drop cut $376 million from the value of its shares outstanding. Parexel warned analysts to lower their growth projections to 20 percent to 25 percent for its second quarter and 25 percent to 30 percent for its 1999 fiscal year. The company signed contracts valued at as much as $75 million during the past several quarters, and is starting to receive revenue from them. It missed earnings estimates when work on higher-revenue contracts signed more recently was delayed, analysts said. ''We and others had them growing more than 30 percent,'' said John Kreger, an analyst with Vector Securities International. ''It doesn't look like a disaster, but the numbers are going to have to come down.'' Larger Research Projects Kreger lowered his rating on Parexel to ''neutral'' from ''attractive'' in the morning, but then raised it back after the share price fell. ''A $15 drop will do that,'' he said. Boston-based Parexel said its fiscal first-quarter earnings rose to $5.5 million, or 22 cents, from $4.33 million, or 18 cents, a year earlier. It was expected to earn 24 cents in the quarter ended Sept. 30, according to the average estimate of analysts polled by First Call Corp. Revenue rose 31 percent to $82.8 million from $63 million. The company said it averaged $70 million to $75 million in contracts in the five fiscal quarters ending in March, and hoped to get larger research projects started to raise revenue. It took longer to set up criteria for the newer contracts, causing the company to miss estimates. P/E Ratio ''These aren't delays in projects,'' said Josef von Rickenbach, chief executive of Parexel. ''We have started. They are on track, but they are very complex and have taken somewhat longer to get up to revenue levels we anticipated.'' Parexel's share price drop, an analyst said, was also driven by its high price-to-earnings ratio, which investors use to determine the relative risk of a stock. Stocks with a price/earnings ratio over 20 are considered risky. On Friday, Parexel's was 108, but fell to 50 after the share price dropped. ''The outlook, while it's been reduced, is still positive,'' said John Ederer, an analyst with Volpe, Welty & Co. who has a ''buy'' rating on the stock. ''It's not like this company is falling apart, but that's what the stock is suggesting.'' Other research companies fell on the news. Pharmaceutical Product Development Inc. fell 1/4 to 28 1/8. Kendle International Inc. fell 2 3/4 to 25. Quintiles Transactional Corp. fell 5 3/4 to 42 1/4. Applied Analytical Industries Inc. fell 11/16 to 15 3/8. Parexel has offices in 25 countries and about 3,900 employees. About two-thirds of revenue comes from its contract-research business, with the remainder split between its consulting and medical marketing businesses, it said.