S&P Global Ratings assigned a B corporate credit rating to PAREXEL International Corp.
The outlook is stable.
The rating agency said key risks for the company's business are its relatively small size, exposure to cancellation risk, below-average EBITDA margins and in-progress operational improvements.
S&P said these risks are mostly offset by PAREXEL International's position as a top-three clinical research organization, predictable revenue stream from a $4.1 billion backlog and preferred partnerships with large pharmaceutical companies, as well as positive industry outsourcing trends.
The stable outlook reflects revenue growth of in the low-single digits in 2018 and adjusted EBITDA margins of 16% to 17%, reflecting high spending on efficiency projects. The rating agency expects discretionary cash flow above $30 million in fiscal 2018 and adjusted debt to EBITDA of about 8x, declining to the mid-6x area by the end of 2019.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.