Analyst report: Quintiles a "hot IPO"
A report released by an analyst who follows Durham-based Quintiles for the investment research firm Morningstar said the firm believes the company’s stock is worth $46 per share, above the company’s proposed offering range.
Quintiles, a biopharmaceutical services company that manages clinical trials and offers other services for pharmaceutical development companies, said in a U.S. Securities and Exchange Commission filing in April that it expects its initial offering price to be between $36 and $40 per share.
At the $38 midpoint of the range, the offering would net the company about $489.8 million, according to the filing. Then another 5.9 million shares of common stock are being offered by company selling shareholders, and, in addition, underwriters have a 30-day option to buy 2.9 million more shares of common stock from the shareholders.
Company officials plan to use about $306 million of the net proceeds that the company would receive to repay a $300 million term loan, $50 million in debt from senior secured credit facilities and for a $25 million payment to end a management agreement with founder Dennis Gillings and other shareholder-managers.
Any remaining proceeds would be used for general corporate purposes, including strategic growth opportunities such as acquisitions.
A report by Lauren Migliore, a senior equity analyst for Morningstar, said Quintiles is going public at a “ripe time.” The report indicates that the company is worth $46 per share, “well above” the proposed offering rate.
The report said the firm has unparalleled size and exposure that gives it a strong competitive advantage in the contract research organization industry.
“Drugmakers’ increased use of outsourcing and the emerging strategic partnership model are further bolstering Quintiles’ already formidable defenses against weaker rivals, earning the firm a positive moat trend,” the report stated.
The firm expects Quintiles to see 8 percent compound annual revenue growth in the next five years, driven by increased outsourcing of clinical trials and market share gains.