PAREXEL International (PRXL): Shares defing bullish 'flag' formation

PAREXEL International Corporation (NASDAQ: PRXL) provides contract research, medical marketing and consulting services to the pharmaceutical, biotechnology and medical device industries. Its Clinical Research Services segment offers clinical trial and data management, clinical pharmacology and related medical advisory services. The Consulting and Medical Communications Services unit offers technical advice in new product development, marketing, and regulatory affairs. Subsidiary Perceptive Informatics sells IT system, medical imaging, and related services that help manage clinical trials.

The company pleased investors last week, when it reported fiscal Q2 EPS of 40 cents and revenues of $284.2 million. Analysts had been looking for 39 cents and $222.8 million. The CEO noted that revenue growth was driven by improvements across all business and geographic reporting segments. Management also guided Q3 EPS to 42-44 cents (43 cent consensus), Q3 revenues to $240-$250 million ($232.11M consensus), FY08 EPS to $1.78-$1.83 ($1.65 consensus) and FY08 revenues to $935-$955 million ($907.20M consensus).

The news boosted the shares above 30-day moving average support into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with two "strong buys," one "buy" and eight "holds." Analysts see a 28% growth rate through the next year. The PRXL Price to Sales ratio (1.51), Sales Growth rate (57.45%) and EPS Growth rate (25.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $31.94 and $58.40. A stop-loss of $49.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.