Analyst Note| Rachel Elfman |
Narrow-moat Syneos reported softened second-quarter results due to lower reimbursable expenses in the Clinical Solutions segment and foreign exchange headwinds. The unexpected decrease in reimbursable expenses was related to lower investigator payments on its COVID portfolio, the impact of an FDA-related delay, and the wind down of a large program. Investors reacted quite negatively to Syneos’ earnings and sent the stock down nearly 18% at close of day. We believe investors overreacted to the earnings results, as the headwinds are likely less impactful in the long-term.