Quintiles Poised To Benefit From Pharmaceutical R&D Outsourcing

Argus maintains its Buy rating on Quintiles Transnational Holdings Inc (NYSE: Q) shares. The brokerage also lifted its price target from $75 to $85. The move comes after the company delivered better-than-estimated second-quarter results and an increased outlook on July 27.

Analysts Jacob Kilstein and Casey Meyers believe the company stands to gain from a number of factors or initiatives, including: pharmaceutical R&D outsourcing, share buyback and synergies from the acquisition of IMS Health.

The analysts believe Quintiles' recent move to acquire IMS for $9 billion will help drug makers focus on suitable patients for clinical studies. The analysts said, "We believe that Quintiles is making the acquisition on favorable terms: it will pay no premium for IMS stock but should generate significant cost and revenue synergies from the deal. The acquisition is expected to close in 2H16 and be accretive to 2017 earnings."

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Argus expects the company to gain from robust sales upside from the organic side, apart from better margins, to lift its EPS. The brokerage estimates continued growth through 2017 based on a number of factors, including: big backlog, increased book-to-bill ratio, favorable industry trends and diversified clients.

At time of writing, the stock was up 0.25 percent on the day at $76.49, 19 cents off Thursday's open.

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