Paraxel International Corporation (PRXL), a provider of biopharmaceutical services, recently acquired all the outstanding equity securities of Liquent, a worldwide provider of Regulatory Information Management (:RIM) solutions for $72 million.
The acquisition will be immediately accretive to Paraxel’s top- and bottom-line in fiscal 2013 (ending June 30, 2013). However, fiscal 2013 reported earnings will be negatively impacted by about 2-4 cents per share.
Paraxel revised its guidance for the second quarter of fiscal 2013 (ending December 31, 2012) as well as fiscal 2013. Based on its accelerated project performance, the company updated its guidance for service revenue for the second quarter of fiscal 2013 to the range of $415 million to $420 million compared with the earlier guidance of $400 million to $410 million. The Liquent contribution is expected to contribute $17 million to $23 million to second quarter revenues.
Paraxel raised its outlook for fiscal 2013 revenues to the range of $1.675 billion to $1.695 billion compared with the prior outlook of $1.63 billion to $1.66 billion. The raised guidance is primarily on the back of contributions from the Liquent acquisition.
Accordingly, Paraxel revised its earnings per share guidance for the second quarter as well as fiscal 2013. The company forecast second quarter fiscal 2013 reported earnings per share in the band of 33 cents and 34 cents compared with 31 cents and 33 cents earlier.
Fiscal 2013 adjusted earnings per share are envisaged in the band of $1.36 and $1.43 (earlier $1.34 to $1.44). The current Zacks Consensus Estimate of $1.38 is within Paraxel’s guidance range.
Liquent offers an integrated platform of software solutions to its client base of more than 200 biopharmaceutical and life science companies. The solutions are used in regulatory submissions and product registration management, as well as a range of complementary business process outsourcing capabilities. The acquisition should hasten Paraxel’s regulatory business processes due to enhanced regulatory capabilities from Liquent’s solid information technology platform.
Following the acquisition, Paraxel will strengthen its perceptive informatics business. The company’s consulting and medical communications franchise will also gain from the buyout.
With a background of robust growth and strong backlog, we are optimistic of Paraxel successfully reaching its top- as well as bottom-line goals. Further, growth will be buoyed by the company’s effort to expand its portfolio.
We currently have a long-term ‘Neutral’ recommendation on the stock which carries a short-term Zacks #3 Rank (Hold). Its peer Covance (CVD) carries a Zacks #2 Rank (Buy).
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