Pharmaceutical Products Dev Ltd. - Momentum

Pharmaceutical Products Development Ltd. (PPDI) recently hit a new multi-year high above $30 before reporting strong Q4 results in early February that came in ahead of expectations. With estimates on the rise and a bullish growth projection, this Zacks # 1 rank stock offers a twist of healthcare to the momentum faction.

Company Description

Pharmaceutical Product Development, Inc. operates as a pharmaceutical research services company worldwide. The company was founded in 1985 and has a market cap of $3.28 billion.

Although PPDI recently pulled back from its fresh high on general market volatility, the trend is most definitely still higher, supported by strong Q4 earnings from early February that came in ahead of expectations.

Fourth-Quarter Results

Revenue for the period was up 9% from last year to $357 million. Earnings also looked good, coming in at 39 cents, 3% ahead of the Zacks Consensus Estimate, where the company has either matched or beaten the consensus in each of the last four quarters.

The company’s larger segment, Clinical Development Services, saw sales increase 8% to $277 million. But its biggest gain came from its smaller segment, Laboratory Services, where sales were up 14% from last year to $81 million.

PPD also used the fourth-quarter results to announced an accelerated share buyback program of $200 million to be executed in the first quarter of 2011.

Financial Profile

With strong earnings momentum in hand, PPDI has been strengthening its balance sheet, with cash and equivalents up $217 million from last year to $638 million. The company has no long-term debt.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year adding 13 cents to $1.62 while the next-year estimate jumped 20 cents to $1.88, a bullish 16% growth projection.

Valuation

But in spite of the gains, with valuation picture is still in check, with a forward P/E of 17.4X only a slight premium to its peer average of 16.5X.

12-Month Chart

On the chart, shares hit a new 52-week high in late January before pulling back a bit of general market volatility. But in spite of the short-term setback, the trend is still higher. Take a look below.