PP
D, the recession-hit contract research organisation (CRO) that late last year announced a string of initiatives designed to unlock the value of its operations, has disappointed investors with a profit forecast for 2010 that lagged behind analysts’ estimates.
However, revenue guidance was in a range that topped the analyst consensus and PPD says it is entering 2010 “with clear objectives to restore growth in our business and to create long-term value for our shareholders”.
The US-based CRO is expecting net revenues of US$1.310 billion to US$1.430 billion for the current year, which it says represents single-digit growth over 2009. Announcing its third-quarter results last November, PPD again lowered its revenue and earnings guidance for 2009: the revised forecast for net revenues was US$1.28 billion to US$1.31 billion.
PPD’s fourth-quarter and full-year results for 2009 are due in early February. For the current year, analysts polled by Thomson Reuters were looking for revenues of US$1.32 billion.
The CRO has projected diluted earnings per share (EPS) of US$1.00 to US$1.12 in 2010, well below the analyst consensus of US$1.27 – although that typically ignores any special items. PPD’s own revised estimate for diluted EPS in 2009 was US$1.38 to US$1.40.
According to Reuters, the company’s share price dropped by 6.5% in after-hours trading on the back of the 2010 financial guidance. The shares had previously lifted by less than half that amount in regular trading on the US Nasdaq exchange.
PPD also said its was “currently taking the steps necessary to complete” the spin-off of its compound partnering business from the company’s core contract research operations, which was one of the initiatives announced last November. This transaction is expected to be wrapped up by mid-2010.
“Strengthening our business models, establishing innovative partnerships, and enhancing our global capacity remain key priorities for us in 2010,” commented chief executive officer David Grange. “As we continue to align our business for success, we will continue to invest strategically in our global future. The investments we plan to make indicate our intent to be recognized as the CRO of choice and as a valuable partner for our clients.”
On the global front, PPD has been particularly busy in China of late. It snapped up leading Chinese contract research organisation Excel PharmaStudies in early November 2009, then followed up weeks later with the acquisition of BioDuro LLC, a drug discovery outsourcing company with a 110,000 sq ft state-of-the-art laboratory in Beijing.
