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PRA Health Sciences Q3 Earnings: Can NasdaqGS:PRAH Hit Its $1.14 EPS Target?

in EARNINGS/INVESTING IDEAS by

PRA Health Sciences, Inc. (NasdaqGS:PRAH) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $1.14/share on revenue of $769.1 million. The consensus earnings per share (EPS) of $1.14/share is based on a poll of 11 analysts and represents a decline in eps of −13.7% over the same quarter last year, when the company reported earnings of $1.32/share.

The revenue forecast of $769.1 million based on a poll of 10 analysts implies a year-over-year (YoY) decline in revenue of −1.5%. Last year the company reported $780.7 million in revenue for the quarter.

Expected to report EPS contraction of −13.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $769.14 $780.69 −1.5%
EPS $1.14 $1.32 −13.7%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from PRA Health Sciences, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.82 $0.86 4.5% Beat
Q1, 2020 $1 $1.05 5.3% Beat
Q4, 2019 $1.47 $1.54 4.6% Beat
Q3, 2019 $1.29 $1.32 2.3% Beat
Q2, 2019 $1.17 $1.22 4.1% Beat
Q1, 2019 $1.06 $1.10 3.7% Beat
Q4, 2018 $1.27 $1.31 3.3% Beat
Q3, 2018 $1.07 $1.13 5.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $107.97 $106.61 −1.3% Decline
April 30, 2020 $98.70 $87.36 −11.5% Decline
February 20, 2020 $111.53 $107.09 −4.0% Decline
October 30, 2019 $99.44 $97.71 −1.7% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.56, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.56 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

PRA Health Sciences, Inc. is currently trading at $100.69/share, down −2.7% for the day. The company is trading at approximately 89.0% of its 52-week high of $113.41/share. The company’s stock price is down −5.5% since the last earnings report and down −5.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 39.31 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:PRAH Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 30.29 and a forward P/E multiple of 23.02.

PRA Health Sciences, Inc.’s current share price also implies a price-to-book (P/B) multiple of 5.51. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $100.69
P/E Ratio 30.3x
P/E Ratio (Fwd) 23.0x
PEG Ratio 0.8
Total Debt / Total Capital 18.4%
Levered Free Cash Flow $272.5 million
EV / EBITDA 18.0x

Finbox

PRA Health Sciences, Inc. is a mid-cap stock with a market capitalization of $6.62 billion and a total enterprise value of $7.948 billion. The company operates in the Healthcare sector and the Life Sciences Tools & Services industry.

PRA Health Sciences, Inc., a contract research organization, provides outsourced clinical development and data solution services to the biotechnology and pharmaceutical industries worldwide. The company operates in two segments, Clinical Research and Data Solutions. The Clinical Research segment offers product registration services, including clinical trial management, project management, regulatory affairs, therapeutic expertise, clinical operations, data and programming, safety and risk management, biostatistics and medical writing, quality assurance, and late phase services. It also provides strategic solutions, such as embedded, functional services provider, staff augmentation, and custom-built development solutions, as well as commercialization services; and early development services for Phase I and Phase IIa studies, as well as bioanalytical analysis. The Data Solutions segment offers data, analytics, technology, and consulting solutions to the life sciences market. Its services include market intelligence services, such as targeting and compensation, and pharmaceutical audit suite services; consulting and services comprising brand analytics, managed markets, commercial effectiveness, and scientific studies/clinical hubs; and technology-enabled products and services that clients to access and analyze Symphony Health and integrated third-party data. PRA Health Sciences, Inc. conducts clinical trials in the areas of pharmaceutical development, including oncology, immunology, central nervous system, inflammation, respiratory, cardiometabolic, and infectious diseases. The company has a partnership with The Leukemia & Lymphoma Society to launch a clinical trial for developing treatments for children with relapsed acute leukemia. The company was formerly known as PRA Global Holdings, Inc. and changed its name to PRA Health Sciences, Inc. in July 2014. PRA Health Sciences, Inc. was founded in 1976 and is headquartered in Raleigh, North Carolina.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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