Shares in Pharmaceutical Product Development (Nasdaq: PPDI) plunged 15 percent Wednesday even though the contract research organization and life science services company reported quarterly earnings Tuesday that topped Wall Street expectations.

However, reported a sharp drop in revenue and more than $200 million in cancelled contracts for the quarter while new business bookings reached $466 million.

The news alaramed analysts.

"The new business wins were $115 million below our expectation and cancellations were $60 million higher. That’s an unfortunate combination," Jefferies & Co analyst David Windley told Reuters.

"That is the second quarter in a row of very weak new business wins," he said.

The earnings report led Robert W. Baird analyst Eric Coldwell to downgrade PPD stock to "neutral" from "outperform," Reuters reported.

"PPD’s position in the market may be waning as lower-margin and more aggressive marketing organizations appear to be taking share," Coldwell said.

PPDI actually opened even lower at $19.02 a share Wednesday before rallying in late-morning trading to $19.46. Still, the drop of $2.62 represented a 12 percent decline from Tuesday’s close. By Wednesday’s close, shares fell to $18.85, down $3.23.

“Even though we continued to face challenging market conditions, PPD delivered strong earnings for the quarter,” said David Grange, who recently took over as chief executive officer at PPD. “We remain very optimistic about the long-term prospects for the CRO industry as a whole, continue to believe we are particularly well positioned for the long term and are firmly committed to pursuing our strategic initiatives to maximize value for all our stakeholders.”

Grange replaced company founder Fred Eshelman as CEO.

PPD earned a profit of 49 cents per share, but that included a 16-cent one-time benefit from the sale of the company’s Piedmont Research Center in Research Triangle Park.

Wall Street analysts polled by Thomson Reuters had expected earnings of 29 cents. Such forecasts typically do not include one-time benefits or expenses.

On July 9, analyst firm Deutsche Securities upped its rating of PPD stock to a “buy.” That move came after PPD disclosed layoffs of 270 people on July 8.

PPD also pulled out of a commitment to establish a presence at the N.C. Research Campus in Kannapolis that would have created 300 jobs.

Overall, PPD reported $355.2 million in revenue, down from $403.1 million a year earlier. Operations revenue fell to $53.4 million from $69.9 million . PPD reported a tax gain of $19.4 million on the Piedmont Research Center sale.