Research Contractors Slammed After Kendle Warns Investors

Kendle International (KNDL) shares were cut in half on Tuesday after the company warned about worse-than-expected first quarter earnings.

Kendle, which provides contracted clinical development services to the biopharmaceutical industry, told investors that its profits would be well below the $121.3 million predicted by analysts. The company cited conditions in the biopharmaceutical sector, which are delaying contracts and limiting the number of requests for new proposals. Many existing research contracts are also being canceled due to market conditions. Baird downgraded the company to Neutral from Outperform. Shares fell by close to -50% on the news.

As a whole, the Contract Research Outsourcing Stocks Index is down by -7.2%. It is now trailing the S&P 500 by -6.2% this month. These firms are hired by pharmaceutical firms to provide research services related to the discovery and approval process for new drugs.

Yesterday, Jeffries downgraded Charles River Laboratories (CRL) to “hold” from “buy.” The analyst maintained the company’s $33 price target, but thought price discounting posed more risk to margins than could be justified by the potential reward. After closing at $29.59 on Friday, the stock hit an intraday low of less than $25 Tuesday.

Kendle peer Parexel International (PRXL) is off by more than -15% today. Life Sciences Research (LSR) is also down significantly, losing -7% of its share value.

Pharmaceutical Product Development (PPDI) and ICON (ICLR) are both down by more than -5%.

MDS, Inc. (MDZ) and Albany Molecular Research (AMRI) are bucking the industry trend today, up by 4.5% and 2% respectively.

As of this writing, the Contract Research Outsourcing Stocks Index is one of the 25 worst-performing tickerspy Indexes this month with gains of 4%.

Investors can follow the Contract Research Outsourcing Stocks Index and view related performance charts and metrics at tickerspy.com.

Tags: AMRI, CRL, ICLR, KNDL, LSR, MDZ, PPDI, PRXL