Goldman Sachs Color On CROs

Goldman Sachs reports on Parexel International Corporation PXRL and Pharmaceutical Product Development, Inc. PPDI, stating that GlaxoSmithKline GSK is negotiating contracts to enter into strategic relationships with these late-stage CROs: For Parexel, Goldman states: "We believe that: (1) bookings momentum will continue, supported by increased strategic deals, and (2) PAREXEL's global footprint should allow the company to win a disproportionate amount of new business. Recent strong new business wins should provide support for future top- and bottom-line growth and we expect that the EPS guidance will prove conservative and remain comfortable with our above-guidance/above-consensus FY2011 estimate of $1.37." And for PPD, Goldman says: "We continue to see back-half guidance as achievable which will be helped by cost efficiencies where management is looking for 100 bp sequential reduction in SG&A (as a % of sales) in both 3Q and 4Q. Also, we remain comfortable with the company's rate of backlog conversion as management recently stated that the overall duration of its backlog is holding steady at about 35 months." Parexel International Corporation closed Friday at $22.01. Pharmaceutical Product Development, Inc. closed Friday at $24.78. GlaxoSmithKline closed Friday at $39.82.