The shares of Syneos Health ( NASDAQ: SYNH ) traded lower in the pre-market Tuesday JPMorgan downgraded the Contract Research Organization to Neutral from Overweight, citing uncertainty over the company's revenue outlook.
The analysts led by Casey Woodring attributed the decision to SYNH's recent update on the Book-to-Bill ratio, noting that it has prompted the team to be more cautious about SYNH's growth outlook compared to those of peers.
The analysts are particularly concerned about the near-term softness in the company's large pharma pipeline, arguing that it's an issue specific to SYNH given its lower exposure to large pharma partners.
"To that end, we would favor owning a large-scale CROs in the space that have more large pharma relationships (and subsequently less exposure to Smid biotech) and significant competitive advantages for potential share gains," Woodring and the team wrote.
Arguing that the discount reflected in SYNH's 2023 EV/EBITDA multiple vs. peers is justifiable until there is more clarity on the top line, JPMorgan lowers the price target on the company to $53 from $85 per share.
Read: SYNH's update on the Book-to-Bill ratio indicated "further sequential declines in 3Q clinical net awards and NBB [net book-to-bill]," Baird analyst Eric Coldwell wrote in September.
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Syneos Health downgraded to Neutral at JPMorgan on outlook