Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Medidata Solutions, Inc. Shares Dipped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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 Medidata Solutions (NASDAQ: MDSO  ) , a developer of cloud-based software used in clinical research for the life sciences industry, dipped as much as 11% after reporting its fourth quarter results before the opening bell.

So what: For the quarter, Medidata reported a 27% increase in revenue to $74.6 million as adjusted EPS improved 37% to 0.23 per share. By comparison, Wall Street was looking for $73.9 million in revenue on $0.18 in EPS. Furthermore, the company's subscription backlog grew 23% to $228 million as 100% of large enterprise customers renewed their business with Medidata. Looking ahead, Medidata is projecting fiscal 2014 full-year revenue of $340 million-$345 million on adjusted net income of $41 million-$44 million, or $0.74-$0.79 per share. The Street, on the other hand, expected EPS to hit $0.83 in 2014 on revenue of $339 million.

Now what: While the fiscal 2014 EPS miss itself isn't all that bad with regard to severity, the simple fact that the company is trading at 70 times the midpoint of its offered guidance proved more than enough to clobber Medidata today. On one hand, Medidata's recurring contracts, impressive client retention, and the growing need for clinical research software to improve efficiency and reduce costs makes the company incredibly attractive. On the other hand, its valuation has always been an eyesore, and investors expect constant EPS beats if it's going to maintain this type of premium over its peers. I would suggest continuing to watch Medidata safely from the sidelines until we see a sizable pullback (i.e., much more than we've witnessed today).

Medidata Solutions has been a highflier for years, but even it may find it difficult to keep up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2827371, ~/Articles/ArticleHandler.aspx, 9/4/2015 10:38:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

Today's Market

updated Moments ago Sponsored by:
DOW 16,152.08 -222.68 -1.36%
S&P 500 1,926.72 -24.41 -1.25%
NASD 4,697.79 -35.71 -0.75%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 10:12 AM
MDSO $46.35 Down -0.06 -0.13%
Medidata Solutions CAPS Rating: **