PRA Health: Clinical Profits

04/25/2017 2:50 am EST


Timothy Lutts

Publisher, Cabot Heritage Corporation

As a growth investor, I’m always on the lookout for companies with revolutionary new products or services, notes Timothy Lutts, editor of Cabot Stock of the Week.

At the same time, it’s important not to overlook companies with solid, dependable long-term growth stories, and with management teams that continually pull the right levers to keep growth humming.

That’s exactly what PRA Health Services (PRAH) offers investors. The company is the fifth largest clinical research organization in the world, with more than 11,000 employees in more than 80 countries.

The firm is able to help its clients with most facets of clinical research, including everything from Phase I trials (such as compound and safety testing) to Phase IV (post-marketing research). It also provides its clients with data, reporting, regulations, medical writing and publishing, as well as clinical diagnostics.

PRA continues to attract more large clients thanks to a couple of advantages. The first is speed. Because of the proximity of many of its labs to its clinical research centers, PRA estimates that it can deliver between six and 12 months of time savings on Phase I-IIa testing.

A second advantage stems from the company’s data and analytics solutions, which integrate many of the firm’s capabilities into a single system, making it easier to plan, design and track a comprehensive study.

Takeda Pharmaceutical (TKPYY), the Japanese drug giant, has signed on with PRA to perform the vast majority of its full-service clinical work to bring its huge pipeline to market. Given that Takeda spends more than $3 billion per year in R&D, the potential for PRA is huge over time.

PRAH is not likely to ever be a truly hot stock, but the company’s solid, dependable story, its prospects of accelerating growth and the stock’s breakout all bode well. I think the stock looks like a good buy around here as it consolidates in a tight range following the recent surge. Buy.

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