Why Medidata Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of clinical development software specialist Medidata Solutions (NASDAQ: MDSO  ) surged 16% today after its quarterly results and guidance topped Wall Street expectations.

So what: Medidata's first-quarter results -- adjusted EPS of $0.35 on revenue of $63.3 million versus the consensus of $0.12 and $61.3 million -- and full-year outlook were so strong that analysts have no choice but to raise their growth estimates yet again. In fact, application services backlog spiked 46% from the year-ago period to $156 million, giving investors some decent visibility into upcoming quarters.

Now what: Management now sees full-year 2013 revenue of $270 million-274 million, up from prior guidance of $265 million-$270 million and nicely ahead of Wall Street's view of $267.2 million. "Life science companies are rapidly moving to the cloud and away from the legacy, on-premise solutions offered by our competitors," said CEO Tarek Sherif. "We expect to continue to be the primary beneficiary of this transition." Of course, with the stock now up a whopping 150% over the past year and trading at a 40-plus forward P/E, much of that optimism might already be baked into the valuation.

Interested in more info on Medidata? Add it to your watchlist.


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