Icon loses 22% of value after predictions of slow revenue growth

ICON, the Nasdaq-listed Irish clinical research group, lost 22% of its value at one stage yesterday after warning that revenue growth would be slower than expected.

The company’s shares lost nearly $10 in value in early trading in New York following the announcement that revenue growth would slow in the next six months.

Chairman Dr John Climax said yesterday in a statement: “Some recent project delays in the US lead us to expect that revenue growth will slow in the first half of fiscal 2005, particularly in quarter two, which ends on November 30, but should re-accelerate thereafter.

“We therefore expect overall revenue growth of approximately 10% in Fiscal 2005 and earnings per share of between $2.00 and $2.10.” According to Reuters Estimates, analysts on average were expecting the company to report full year 2005 revenue of $357 million and earnings per share of $2.28.

The shares clawed back some ground towards the end of the trading session.

The company, which conducts treatment trials for biotech and pharmaceutical companies, said earnings per share rose to $1.88 in the year to end May 2003, compared to $1.50 the previous year.

Revenues for the year climbed 32% to $296.9 million, with operating profits coming in 38% ahead at $24.9 million.

For its fiscal fourth-quarter, the company reported earnings of $7.2 million, or 51 cents a share, up from 43 cents a share for the same period last year, and above the average analyst estimate of 49 cents a share, according to Thomson First Call analysts.

Revenues were $77.9m, an 18% increase over the same quarter last year. However, excluding the impact of acquisitions, revenue growth was 13% ahead of last year for the quarter, Dr Climax said.

“Organic revenue growth was 21%, earnings per share increased by 25%, operating margins expanded and we had strong cash flows. In addition, we added significantly to our advisory services through the acquisition of Globomax, we gained some significant new clients and succeeded in converting a number of existing relationships to preferred provider status.,” he said.

Dublin-based ICON has grown rapidly in recent years, with the help of several acquisitions, and now employ 2,500 people in 12 countries.