UPDATE: Jefferies Color On PPDI 4Q

Over the past year, Pharm. Product Dev. PPDI has successfully squeezed costs while winning strategic deals, reorganizing its selling effort, and accelerating revenue growth, Jefferies reports. “CEO Grange successfully stretched the company out of its West-centric focus,” Jefferies writes. “Although margins were impacted in the short-term, investors are now seeing the benefit which should continue. “PPDI reported 4Q10 non-GAAP EPS of $0.40 on $358.1M in net revenues. Our estimate was $0.35 on $354.2M and consensus was $0.38 on $354M. The net book-to-bill was 1.21. “PPD has historically had industry leading margins. Gross margins have run north of 50% with operating margins in the high teens (over 20% ex-stock comp). The onset of the financial crisis saw PPD as a rigid company, inflexible to customer specific needs. Overall performance was impacted. “As a result, Grange was brought in as CEO to stimulate culture change and collaboration. This effort has met with measurable success. Now the company is more client focused with a realigned selling effort and 16 strategic partnerships. Although margins were adversely affected during the transition period, they have recovered rapidly. Grange should be credited for providing the leadership to invigorate relationships with customers.” Pharm. Product Dev. Closed Wednesday at $28.84.