Shares of INC Research were trading as much as 10 percent higher in early trading Monday after it posted another quarter of double-digit revenue growth and boosted its earnings outlook for the fourth quarter.
The Raleigh-based pharmaceutical services company reported before the markets opened Monday that revenue rose 10.7 percent to $259.6 million in the third quarter, and increased nearly 12 percent after adjusting for currency fluctuations. That was ahead of the $259.3 million anticipated by analysts surveyed by Zacks Investment Research but fell just short of the $259.7 million projected by analysts polled by Bloomberg News.
Adjusted net income totaled $35.3 million, or 64 cents per share, up from $33.9 million a year ago and one cent ahead of analyst projections in both surveys.
Shares rose as high as $45.75, up $4.30, in early trading. The company’s shares have fallen 6 percent this year.
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Analyst Greg Bolan wrote in a research note that INC’s latest results demonstrate that it is still gaining market share from competitors. INC ranks among the largest contract research organizations, or CROs, that help drug companies conduct clinical trials of experimental medicines and analyze the results.
CEO Alistair Macdonald told analysts during a conference call that the company added 25 new customer relationships during the quarter. Although those new customers are mostly small biotechnology and pharmaceutical companies, he added, “from tiny acorns major oaks grow.”
Analyst John Kreger of William Blair & Co. labeled INC’s performance “reassuring” in the wake of disappointing numbers issued last week by one of its major competitors, Parexel.
INC maintained its revenue outlook for the fourth quarter but boosted its guidance for earnings per share to between $2.48 and $2.52, compared to its earlier guidance of $2.39 to $2.50.
Chief Financial Officer Greg Rush said he wasn’t ready to provide detailed guidance for 2017 but noted that the company’s bookings and backlog through the first nine months of the year had put INC on track to achieve its long-term revenue growth target of 10 to 12 percent. In addition, he said, the company had laid a foundation to grow its earnings per share “by the mid to high teens.”
Macdonald said he was excited to have taken over as CEO at the beginning of October, “particularly given the strength of our business and the strong backlog we have for the remainder of 2016 and beyond.” Macdonald, who previously was president and chief operating officer, rose to the top job after former CEO Jamie Macdonald (no relation) unexpectedly announced at the end of July that he planned to depart the company.
As previously announced, Jamie Macdonald’s departure created a domino effect that led to Michael Gibertini, previously president of clinical development, being promoted to chief operating officer. Tara Fitzgerald, who had been executive vice president of biometrics, succeeded Gibertini as head of clinical development services.
“Both of these individuals have a wealth of experience and have been critical to our success,” Alistair Macdonald said.
INC has more than 6,700 employees worldwide, up from 6,600 at the end of the second quarter, including a little more than 1,400 across North Carolina. It also has about 1,000 Triangle workers, up from 985 at the end of the second quarter .