I picked up a few shares of SFCC at 12.88 this morning. There was a negative article about their business practices in Bloomberg recently, which caused a major selloff. Then a few skeletons in the closet were exposed pertaining to a couple of key manager's backrounds, causing further declines. However, SFCC sure looks cheap here if they can meet their '06 guidance. A shake-up in management would also help. SFCC looks risky but cheap....
SFBC Int'l Sees Revenue Gains in 2006
Thursday December 15, 8:44 am ET
SFBC International Cuts 2005 Outlook, Sees 2006 Revenue Up at Least 8 Percent
MIAMI (AP) -- SFBC International Inc., a research firm that conducts clinical trials for biotech and pharmaceutical companies, cut its profit expectations for this year on Thursday but issued 2006 guidance within reach of Wall Street' expectations, forecasting revenue growth of at least 8 percent.
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SFBC also announced that its independent counsel has finished investigating allegations about the company's clinical trial practices in response to articles published by Bloomberg Market Magazine and concluded that the central theme of the articles is "wholly unsupported."
Citing lower than expected revenue, the company cut its 2005 earnings estimate to $1.56 to $1.61 per share down from a previous forecast of $1.66 to $1.72 per share. Excluding items, SFBC forecast earnings of $1.88 to $1.93 per share, down from $1.96 to $2.02 per share.
Analysts, on average, are looking for adjusted earnings of $1.92 per share for the year, according to Thomson Financial.
SFBC also narrowed its full-year estimate for direct revenue to $329 million to $330.5 million, from $325 million to $335 million forecast in November.
Chief Executive Arnold Hantman, in a statement, said the company saw lower gross profit margins for its business in Miami during the third quarter on lower revenue than expected. The shortfall, which Hantman said was exacerbated by bad publicity from the Bloomberg articles, also carried into the fourth quarter.
The articles questioned the company's practices, including the use of poor immigrants to participate in clinical trials for pharmaceutical clients.
The U.S. Senate's finance committee has asked SFBC to meet with the panel to discuss the allegations by Friday, and SFBC said Thursday that it plans to provide the senators with results of the internal inquiry.
SFBC shares jumped $2.44, or 13.8 percent, in trading before the markets open after closing at $17.66 on the Nasdaq Wednesday.
Looking ahead to 2006, SFBC forecast earnings of $1.80 to $1.86 per share, on a net basis, or $1.93 to $1.99 per share, excluding items. It pegged 2006 revenue at $355 million to $363 million, reflecting an increase of 7.5 percent to 10 percent from the mid-point of its 2005 annual guidance.
The analyst consensus estimate calls for 2006 earnings of $1.97 per share, excluding items, on revenue of $377.4 million.
