In an initiative to enhance clinical development in Japan, PAREXEL International Corporation PRXL, a global biopharmaceutical services company and provider of clinical research and logistics has formed an alliance with Osaka International Cancer Institute to bolster patient enrollment for clinical trials in oncology and hematology.
Per management, Osaka will leverage on PAREXEL’s biopharmaceutical expertise to provide a wide range of potential treatment options to cancer patients. We believe solid advancement of clinical trials with scientific expertise in the oncology segment will fortify PAREXEL’s foothold in the niche markets (both oncology and biopharmaceutical). In this regard, oncology is the largest and the fastest growing therapeutic area for PAREXEL. In fact, the segment grew 31% on an average over the past four years.
However, we believe initiatives like these will help PAREXEL drive its top and bottom line. A solid long-term expected earnings growth rate of 13% holds promise in this regard. Furthermore, the biopharmaceutical services market is healthy and PAREXEL enjoys a competitive edge in the space.
Solid Prospects in Asia Pacific
PAREXEL’s growth story in the Asia Pacific has been compelling. In Japan, the company has a leading position among biopharmaceutical companies and is well positioned to advantage from an outsourcing market that is relatively underpenetrated. PAREXEL has operations in Tokyo, Kobe and Osaka in Japan.
After reporting third-quarter fiscal 2017, PARAXEL’s business across Asia has more than doubled over the last two years, at a CAGR of almost 50%. Apart from Japan, the company sees solid prospects in China — the world's second-largest pharmaceutical market witnessing double-digit growth.
Shares Shine Bright
PAREXEL has had an impressive run on the bourse over the last three months. The company has gained 10%, comparing favorably with the broader industry’s addition of 1.9%. The stock has also outperformed the S&P 500’s return of 1% over the same time frame.
The estimate revision trend for the current quarter and full year has been stable in the last two months. Notably, the Zacks Consensus Estimate for the current quarter and full year stood at 94 cents and $3.23, respectively, over the same time frame.
PAREXEL has a Zacks Rank #3 (Hold).
Apart from fortifying hold in the oncology space, PAREXEL is focused on expediting activities in areas like protocol design, study start-up, trial execution, regulatory submission and product commercialization. The company provides a broad range of clinical research, consulting, medical communications and technology solutions and services to pharmaceutical, biotechnology and medical deviceindustries worldwide.
In fact, the global market trends seem favorable at the moment. The biopharmaceuticals market is anticipated to reach a worth of $278 billion by 2020 at a CAGR of 9.4%, per Persistence Market Research. We expect PAREXEL to gain significant traction in the biopharmaceutical and related ancillary markets, courtesy of the favorable trend and the latest partnership.
A few better-ranked stocks in the broader medical sector are Edwards Lifesciences Corp. EW, IDEXX Laboratories, Inc. IDXX and Stryker Corporation SYK. Notably, Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories and Stryker Corporation have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock represents an impressive year-to-date return of 21.9%.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. Notably, the stock represents a stellar year-to-date return of 28.3%.
Stryker represents an impressive year-to-date return of 21.1%. The stock has a long-term expected earnings growth rate of 10%.
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