inVentiv Reinvents Growth

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One of Thursday's biggest stock stars, inVentiv Health (Nasdaq: VTIV), jumped a whopping 33% because of stronger-than-expected earnings. That sounds great, but the company is still trading at about a third of its 52-week high. It's got a long road to recovery, but at least its third-quarter results were a step in the right direction.

Revenue grew 13% year over year for the pharmaceutical services provider, but operating expenses grew faster, leading to a 4% drop in operating income.

Still, if inVentiv Health can keep up the double-digit growth across all three of its divisions, it should be able to easily push those margins back up. But that's a big if.

The big question will be its communications division. With the Food and Drug Administration delaying drugs left and right -- witness Eli Lilly's (NYSE: LLY) prasugrel and GlaxoSmithKline's (NYSE: GSK) Promacta -- there are fewer potential customers for inVentiv's marketing campaigns.

inVentiv could make up the difference with its commercial division that provides sales representatives for drug companies. As companies like Glaxo, Merck (NYSE: MRK), and Schering-Plough (NYSE: SGP) cut their internal sales representatives, they're more likely to hire inVentiv to hock their drugs because the company can provide a lot more flexibility. Some of this business is already coming in -- Cephalon (Nasdaq: CEPH) nearly tripled its inVentiv sales representatives -- which has more than made up for the end of inVentiv's contract with Boehringer Ingelheim, which decimated its stock price in September.

With adjusted earnings per share expected to come in at $1.56 to $1.61 this year, the Motley Fool Hidden Gems selection is looking pretty reasonably priced at 7.6 times 2008 adjusted earnings. Then again, so are a lot of other companies. And the drooling continues.