Stronger Revenue Forecast Sparks PPD Stock to Record High

WILMINGTON — Shares of Pharmaceutical Product Development (Nasdaq: PPDI) soared 10 percent to a record close on Wednesday after the company projected stronger-than-expected earnings for 2008.

Chief Executive Officer Fredric Eshelman said on Tuesday that he was “quite bullish about both segments of our business.” The financial update triggered an upgrade in UBS’ stock rating on PPD to “buy” from “neutral.”

Stock in the drug-development and pharmaceutical services provider shot up to $46.89 as a result. The stock closed at $46.86.

Eshelman forecast a profit of between $1.82 and $1.92 per share in 2008. Analysts at Thomson Financial had predicted $1.71 in earnings on $1.51 billion in revenue. PPD forecast revenues at between $1.54 billion and $1.59 billion.

"Given that we view PPD as a revenue-growth story, as opposed to a margin-expansion story, we view this data point as a significant," UBS analyst Robert Gilliam said, referring to the expected boost in development revenue.

Gilliam raised his target stock price for PPD to $55 from $45.

The company said it expected to earn an additional $40 million from drug-development partner Takeda after Takeda filed for Food and Drug Administration approval of a type 2 diabetes drug. That move triggered a $15 million milestone payment to PDD. If the drug is approved, PPD would receive another $25 million.

Gilliam also forecast increasing partnership revenues for PPD through 2010.

Friedman, Billings, Ramsey analyst James Krumpel reaffirmed an "outperform" rating and similarly increased his price target to $55 from $50, according to the Associated Press.