Kendle's 3Q EPS Beats Estimates

Goldman Sachs has published a research report on Kendle International Inc. KNDL after the company reported a 3Q that was aided to the upside by lower taxes. In the report, Goldman Sachs writes "Kendle reported 3Q EPS of $0.10, vs. us/consensus at $0.07/$0.04, helped by lower tax ($0.05 vs. our model) on top-line of $83.2 mn which was slightly above us/consensus of $79.5/$81.5mn. Importantly, EBIT of $5.6 mn was above our/consensus estimates of $3.0/$2.9mn where gross profit was 13.2% better than us and SG&A of $33.1 mn (sequential decline of $2.1mn) was 5.5% over our estimate. While this suggests that KNDL is making some progress on its previously discussed cost control initiatives, we think focus will remain on new business wins which were $131.4mn (vs. us at $94mn). In the quarter, KNDL's book-to-bill of 1.5 marks the second consecutive quarter that KNDL has achieved a ratio over 1-to-1, aided by lower than expected cancellations. We maintain our Sell rating and 2010-2012E EPS given uncertainty surrounding outlook where we see risk to Street revenue forecasts which imply 4.6% growth in 2011 and appear too high given TTM book-to-bill of 1.25. CC tomorrow at 8:30am EST; dial-in: 800- 946-0709, passcode: 5419062." Goldman Sachs maintains its Sell rating and $8.50 price target. Kendle International closed yesterday at $9.51.