PPD Outlines New Risk Factors Amid Pending Thermo Fisher Merger

Global contract research organization PPD (PPD), will be acquired by Thermo Fisher Scientific (TMO) for $17.4 billion in cash, including the assumption of debt. The transaction is expected to close by the end of 2021. (See Analysts’ Top Stocks on TipRanks)

PPD offers clinical development and laboratory services to customers in the pharmaceutical and biotech industries along with government entities.

Using TipRanks, we took a look at the company’s latest financial performance and newly added risk factors.

Q3 Financial Results

PPD earned revenue of $1.56 billion for Q3 2021, compared to $1.23 billion during the same period last year, reflecting a 26.5% growth. Revenues from Clinical Development services increased 26% year-over-year to $1.27 billion, while revenues from Laboratory services jumped 28.9% year-over-year to $290.2 million.

The company posted adjusted earnings per share of $0.43, against $0.30 per share in the same quarter last year. (See PPD stock charts on TipRanks)

Additionally, PPD ended Q3 with $1.17 billion in cash and $598.4 million in revolving credit facility. The company owes $4.29 billion in debt.

Risk Factors

PPD carries 48 risk factors, according to TipRanks’ Risk Factors tool. Since Q4 2020, the company has updated its risk profile with four new risk factors, all related to its pending acquisition by TMO.

The company has told investors that the deal could collapse due to regulatory issues. It has cautioned that failure to complete the merger could unfavorably affect its business and stock price.

PPD has also cautioned that the merger deal may be subject to lawsuits, which could not only delay the closing of the merger, but could also be expensive to defend and could divert management’s attention.

What’s more, the company has informed investors that its agreement with TMO is subject to a number of limitations. Meanwhile, PPD is restricted from encouraging a third-party to make an alternative acquisition offer challenging TMO. 

A majority of PPD’s risk factors fall under the Finance and Corporate category, with 44% of the total risks matching the sector average. PPD’s stock price gained about 38% year-to-date.

Analysts’ Take

Robert W. Baird analyst Eric Coldwell recently reiterated a Hold rating on PPD stock. Consensus among analysts is a Hold based on 1 Buy and 4 Holds, with the average PPD price target of $47.50 implying 0.7% upside.

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