Investor Relations/ [IRO Name] [Fourth Quarter 201X] Activities

Transcription

1 Investor Relations/ [IRO Name] [Fourth Quarter 201X] Activities PERFORMANCE COMMENTARY: MONTH OPEN LOW HIGH CLOSE AVG. VOL. October $39.51 $37.12 $41.64 $ ,186 November $37.55 $37.48 $41.07 $ ,238 December $38.51 $35.54 $39.57 $ ,000 January (thru 1/25) $38.41 $37.38 $43.30 $ ,418 COMPANY 123 shares opened Q4 at $XX.XX, after increasing X.X% in the final two days of Q3. As noted in our last report, the COMPANY 123 stock price increase was the result of speculation in an analyst report by ANALYST A that our 456 business might outperform in 2H12 because DIRECT ANALYST QUOTE HERE. The stock continued to trade in a range between $XX and $XX throughout October, reacting moderately to the building negative sentiment in the broader market over concerns about the health of the economy, the impending election and fiscal cliff negotiations. Company-specific reports also moved the stock: a Barron s article on [Insert date here] commented that private equity firms were awash with cash and mentioned COMPANY 123 (COMPANY 123 up 3.9%), and our announcement of the COMPANY XYZ strategic partnership on [Insert date here] that was smaller than speculated (COMPANY 123 down X.X%). We reported Q3 results after the market closed on [Insert date here]. While EPS beat First Call by $0.0X, the stock reaction was strongly negative, declining X.XX% to close at $XX.XX on [Insert date here]. The sell-off was probably a combination of factors: concern about a slowing RMS fourth-quarter growth rate, and some fast-money investors who came into the stock following ANALYST B s speculative note on [Insert date here]. However, longer-term investors likely took advantage of the price weakness to pick up shares. COMPANY 123 regained X.X% on November 1 st and closed at $XX.XX. On November 5 th after the market closed, PEER A s Q3 EPS beat the First Call mean by $0.0X and Early Development (ED) posted sequential margin improvement of 370 basis points, which helped turn investor sentiment more positive towards PEER A s shares. PEER A shares jumped X.X% on November 6 th and COMPANY 123 also gained X% to close at $XX.00. Both stocks lost some ground following the election, consistent with market declines, but COMPANY 123 resumed trading in a fairly tight range between $XX and $XX through the remainder of November and leading into our 2013 guidance call. We issued 2013 guidance on [Insert date here], with an EPS range of $X.XX-$X.XX, below the First Call mean of $X.XX. The disconnect with First Call was primarily driven by analysts expectations of approximately a 50-basis- point operating margin expansion in 2013, to XX.X%. Our outlook for a similar margin to 2012 fell short of this expectation. As a result, the stock reaction was extremely negative, declining X.X% ($X.XX) to close at $XX.XX on volume of X.X million shares. We bounced back on [Insert date here], due in part to upgrades from JP Morgan and Wells Fargo. COMPANY 123 shares recovered X.X% to close at $XX.XX on volume of X.X million shares. Despite the new concern over our 2013 outlook and longer-term margin expansion potential, we maintained a $XX-$XX range for the remainder of the year, closing on December 31 st at $XX.XX (a gain of XX.X% for the year). 1

2 In 2012, COMPANY 123 widely outperformed compared to PEER B (+XX.X%), the S&P 500 (+XX.X%), and the DJIA (+X.X%). In the fourth quarter, COMPANY 123 (-X.X%) did give back some gains after outpacing PEER B (+XX.X% in Q4) and the broader markets in Q3. Since the JPMorgan conference in January, there has been a rotation into preclinical (COMPANY 123, PEER B) providers and, in general, the broader healthcare sector has also performed well. PEER B reignited hopes that the preclinical market would begin to modestly rebound in 2013 with a positive tone at the JPMorgan conference. COMPANY 123 broke above the $40 level after JPMorgan on January 10 th, where we have remained since. On January 24 th, PEER B reported Q4 results; EPS exceeded the First Call mean by $0.03, which was again driven by its Late-Stage segment. Although its ED commentary was more subdued than at the JPMorgan conference two weeks earlier (a fact on which some analysts commented, speculating that the stock would decline), PEER B shares reacted favorably (+X.X% on January 25 th ) to its 2013 EPS guidance of $X.XX-$X.XX (First Call mean was $X.XX). Year-to-date through January 25 th, both COMPANY 123 (+XX.X%) and PEER B (+XX.X%) have continued to post impressive gains after strong 2012 returns. SHAREHOLDER COMMENTARY: Jan Change Jan Bought Rank Top 10 Institutions Est. Position Since 9/30/12 Top Buye rs Est. Position Since 9/30/12 1 Vanguard Group 3,050,694 0 Fidelity Management & Research Company 955, ,000 2 Ariel Investments 2,833,725 (25,000) Columbia Management Investment Advisers 545, ,000 3 BlackRock Institutional Trust Company 2,534,686 40,000 Adage Capital Management 689, ,000 4 Fairpointe Capital 2,388,952 50,000 Citadel Investment Group 168, ,000 5 Wellington Management Company 2,165,613 0 Invesco, Boston Company, INTECH 150,000 each 6 Invesco Advisers 2,107, ,000 7 Systematic Financial Management 1,566,246 (100,000) Jan Sold 8 Pyramis Global Advisors 1,483,449 50,000 Top Se lle rs Est. Position Since 9/30/12 9 Perkins Investment Management 1,320,922 (780,000) Perkins Investment Management 1,320,922 (780,000) 10 State Street Global Advisors 1,295,852 0 D. E. Shaw & Co. 211,704 (350,000) TOTAL - TOP 10 INSTITUTIONS 20,747,507 (615,000) Bridger Management 560,000 (300,000) % OF SHARES OUTSTANDING 42.7% Renaissance Technologies 342,009 (300,000) Victory Capital Management 405,830 (150,000) Visium Asset Management 277,802 (150,000) NOTE: This commentary is based on surveillance estimates, and does not reflect 2012 year-end 13-F filings, which are due on February 15 th. As a result, there may be changes to the share positions which will be reflected in the next report. As was the case in Q3, Q4 was again a very stable quarter for our top-10 shareholder base. The most significant change was in the Perkins Investment Management (deep value firm; estimated basis of ~$XX) position. Perkins has had a long history with COMPANY 123. The firm initiated a position in 2003, and held until 4Q07. It reinitiated a 1M- share position in 4Q08 and has been in our top 10 since shortly thereafter; the position peaked at 4.9M shares in December The portfolio manger trimmed the position earlier this year, but became a more consistent seller in the second half as the stock price steadily increased. Given the extent of the selling, it appears that he intends to exit the stock. Other than Perkins, most of the top sellers in Q4 were hedge funds. D.E. Shaw, Bridger, Renaissance and Visium have aggressively traded our stock in recent years, quickly acquiring and selling significant positions. Most of the buyers in Q4 were longer term, plain vanilla investors. It appears that our increasingly positive results have given investors confidence that the market is improving, which is encouraging them to initiate or increase positions. Fidelity was both a buyer and seller in 2012, so it is unclear whether this is the beginning of a more long-term commitment. We have met regularly with Columbia, Invesco and Boston Company, all of whom have owned the stock before. Of these three, only Invesco is in our top 10, although Boston Company and Columbia have the potential to be larger shareholders. Boston Company has held the stock consistently over time, but never built a significant position. If the Q4 buying is confirmed, this would be the first time Boston Company has crossed the 500k-share mark. 2

3 PUBLIC ANNOUNCEMENTS/EVENTS: October 17 October 30 COMPANY 123 Enters Strategic Partnership with COMPANY XYZ COMPANY 123 to Expand Research Models Business October 30 December 12 January 7 COMPANY 123 Third-Quarter 2012 Earnings Release/Call COMPANY 123 Provides 2013 Financial Guidance COMPANY 123 Completes Acquisition of Majority Ownership of QRS CONFERENCES/ROAD SHOWS: DATE SPONSOR/EVENT LOCATION MEETINGS November 14 XXX Non-Deal Road 5 meetings/ Montreal, Quebec Show 7 institutions November 15 ABC Field Trip Wilmington, MA 4 institutions November 16 DEF European Investor Meeting Wilmington, MA 3 institutions January 8 XXX Conference San Francisco, CA 15 meetings/ 31 institutions COMING EVENTS: DATE INSTITUTION LOCATION February 13/14 COMPANY 123 Fourth-Quarter 2012 Earnings Release/Call March 5 XXX Conference Boston, MA March 11 XXX Conference San Antonio, TX March 12 XXX Investments Meeting Houston, TX March EFG Non-Deal Road Show Denver, CO / Kansas City, MO March 14 XXX Healthcare Conference Miami, FL May 2 COMPANY 123 First-Quarter 2013 Earnings Release/Call May 7 Annual Meeting of Shareholders XX, MA 3

4 ANALYSTS MEAN ESTIMATES (as of 1/23/13): ($ in MM except EPS) Q4 2012E FY 2012E Q1 2013E FY 2013E Revenue $280.9 $1,130 $293.0 $1,176 Growth % (3.5%) (1.1%) 2.5% 4.0% EPS $0.60 $2.70 $0.70 $2.86 Growth % (13.3%) 5.3% 0.4% 6.3% Price Target (12-Month) $41.56 Recommendations 5 Buys / 11 Holds ANALYST RATING CHANGES: DATE INSTITUTION ACTION RATING December 10 ANALYST C Discontinued Coverage / Analyst Departure Neutral December 13 ANALYST D Upgrade Overweight December 13 ANALYST E Upgrade Outperform January 6 ANALYST F Upgrade Neutral 4

5 5 12/30/2011 1/10/2012 1/20/2012 1/31/2012 2/9/2012 2/21/2012 3/1/2012 3/12/2012 3/21/2012 3/30/2012 4/11/2012 4/20/2012 5/1/2012 5/10/2012 5/21/2012 5/31/2012 6/11/2012 6/20/2012 6/29/2012 7/11/2012 7/20/2012 7/31/2012 8/9/2012 8/20/2012 8/29/2012 9/10/2012 9/19/2012 9/28/ /9/ /18/ /29/ /7/ /16/ /28/ /7/ /18/ /28/2012 COMPANY 123 Stock Price Performance vs. Peers FY 2012: Volume Price Close 12/30/2011 1/6/2012 1/12/2012 1/19/2012 1/25/2012 1/31/2012 2/6/2012 2/10/2012 2/16/2012 2/23/2012 2/29/2012 3/6/2012 3/12/2012 3/16/2012 3/22/2012 3/28/2012 4/3/2012 4/10/2012 4/16/2012 4/20/2012 4/26/2012 5/2/2012 5/8/2012 5/14/2012 5/18/2012 5/24/2012 5/31/2012 6/6/2012 6/12/2012 6/18/2012 6/22/2012 6/28/2012 7/5/2012 7/11/2012 7/17/2012 7/23/2012 7/27/2012 8/2/2012 8/8/2012 8/14/2012 8/20/2012 8/24/2012 8/30/2012 9/6/2012 9/12/2012 9/18/2012 9/24/2012 9/28/ /4/ /10/ /16/ /22/ /26/ /5/ /9/ /15/ /21/ /28/ /4/ /10/ /14/ /20/ /27/2012 Volume ('000s) COMPANY 123 Price & Volume Performance FY 2012:

6 COMPANY 123 Stock Price Performance vs. Indices FY 2012: COMPANY 123: 37.1% Nasdaq: 15.9% S&P 500: 13.4% DJIA: 7.3% COMPANY 123 DOW JONES INDUS ACTUAL NASDAQ COMPOSITE S&P 500 INDEX COMPANY 123 Stock Price Performance MTD through January 25, 2013: COMPANY 123: 15.1% PEER B: 17.0% ICLR: 5.2% PRXL: 16.3% S&P 500: 5.4% COMPANY 123 PEER B ICLR PRXL S&P 500 INDEX 6

7 12/30 1/13 1/31 Volume (000s) COMPANY 123 Short Interest: 2/15 2/29 3/15 3/30 4/13 4/30 5/15 5/31 6/15 6/29 7 7/13 7/31 8/15 8/31 9/14 9/28 10/15 10/31 11/15 11/30 12/14 12/31 Price (US$)