Shares of PRA Health Sciences traded as much as 12 percent higher Thursday after the company posted robust first-quarter results that outpaced expectations and boosted its net income guidance for the full year. But those gains were surrendered at the end of the day.
The Raleigh-based pharmaceutical company’s shares closed at $28.86, down 14 cents. Its shares have risen 19 percent this year. The company went public at $18 per share in November.
PRA increased its adjusted earnings per share guidance for the year by 27 cents, to a range of $1.62 to $1.72, which would be 29 percent to 37 percent higher than 2014 results.
“That is certainly rewarding for shareholders,” Jefferies & Co. analyst David Windley wrote in a research note.
Windley also noted that “a 10 percent rise in the stock is reasonable on these results.”
Adjusted net income for the first quarter jumped 190 percent to $25.8 million, or 41 cents per share. Analysts had been anticipating 31 cents per share. Operating margins that were better than forecast contributed to the increase, Linda Baddour, chief financial officer, said during a conference call Thursday morning. PRA issued its first-quarter results after the markets closed Wednesday.
Service revenue rose 7 percent to $332 million. Revenue rose 10 percent after accounting for currency fluctuations.
“Our first quarter 2015 has got us off to a great start, building on the momentum we (generated) in 2014,” said CEO Colin Shannon.
Although the company boosted its net income guidance for the year, it pared back its revenue projection to account for the strong dollar, which depresses the impact of overseas contracts. Its new projection is a range of $1.34 billion to $1.39 billion, down from its earlier guidance of between $1.35 billion and $1.4 billion.
Contract research organizations such as PRA help pharmaceutical and biotechnology companies test experimental drugs and analyze the results. The Triangle is by far the industry’s largest hub, with three of the largest CROs – Quintiles, which is No. 1, INC Research and PRA – based here.
PRA reported new business bookings in the first quarter of $398 million, which William Blair & Co. analyst John Kreger noted was $25 million more than his estimate. Bookings are a leading indicator of future revenue.
“The better (new business) awards total extends the trend of strong bookings delivered by clinical CROs this quarter,” Kreger wrote in a research note.
PRA has more than 11,000 employees worldwide, including more than 450 locally.