On Wednesday, Deutsche Bank adjusted its stock price target for IQVIA Holdings (NYSE: NYSE:IQV), a notable Contract Research Organization (CRO), reducing it to $270 from the previous $275. Despite this change, the firm maintains a Buy rating on the stock.
The reassessment of the price target comes amid a period of stability and outperformance for IQVIA, particularly in the emerging biopharma sector. According to the firm, IQVIA is gaining market share as large CROs increasingly dominate the space. Industry checks have indicated continued momentum in biotech, which supports a positive outlook for IQVIA shares in the midterm.
The analyst also noted that consensus earnings per share (EPS) estimates for IQVIA appear more grounded as the company approaches 2025, with actual EPS for 2023 and 2024 coming in 12% and 6% below consensus forecasts made six months before the start of each calendar year. Adjustments to the 2025 EPS estimates have been made to reflect a tougher pricing environment for clinical CROs.
However, the potential for upside remains, driven by factors such as greater organic growth in research and development (R&D), a rebound in Technology and Applications Segment (TAS), and strategic capital deployment.
The biotech sector has shown signs of improvement following a robust September, with healthy activity and funding that are expected to accelerate towards the end of the year. Large biopharma R&D is anticipated to grow by 8% year-over-year, with three companies contributing to half of this growth.
The strategic position of CROs is also highlighted, with the expectation that they tend to perform better during periods when interest rates are cut. The firm anticipates further upside to earnings for large CROs as biopharma budgets are finalized and biotech funding continues to flow. This outlook is bolstered by the momentum in funding and activity that has been building since a strong September, with expectations for this trend to continue into the fourth quarter of 2024.
In other recent news, IQVIA Holdings reported steady revenue growth in Q2 2024, with a year-over-year increase of 2.3%, reaching $3,814 million, and an 8.6% growth in adjusted diluted earnings per share. The company anticipates a revenue range between $15,425 million and $15,525 million for the year.
Redburn-Atlantic initiated coverage on IQVIA with a Buy rating, citing optimism for a rebound in the commercial aspect of the business. RBC Capital also initiated coverage on IQVIA with an Outperform rating, highlighting the company's unique data, technology, and extensive service offerings.
Mizuho Securities maintained its Outperform rating, noting the company's focus on internal investments and mergers and acquisitions. In contrast, Jefferies adjusted its stance on IQVIA, shifting the rating from Buy to Hold due to modest bookings increase and competitive pressures. These recent developments reflect the varying perspectives of analysts on the company's performance and future prospects.
InvestingPro Insights
IQVIA Holdings' strong market position, as highlighted in Deutsche Bank's analysis, is further supported by InvestingPro data and tips. The company's market cap of $42.47 billion underscores its significant presence in the Life Sciences Tools & Services industry. With a revenue of $15.15 billion in the last twelve months as of Q2 2024 and a revenue growth of 3.23% over the same period, IQVIA demonstrates steady financial performance.
InvestingPro Tips reveal that IQVIA is trading at a low P/E ratio relative to near-term earnings growth, which aligns with the analyst's positive outlook on the stock. The company's PEG ratio of 0.92 suggests that it may be undervalued considering its growth prospects. Moreover, IQVIA's perfect Piotroski Score of 9 indicates strong financial health, supporting Deutsche Bank's maintained Buy rating.
The stock's low price volatility, as noted by InvestingPro, could be attractive to investors seeking stability in the current market environment. This characteristic, combined with the company's high return over the last decade, reinforces IQVIA's position as a solid long-term investment option in the CRO space.
For investors looking for more comprehensive analysis, InvestingPro offers 10 additional tips on IQVIA Holdings, providing deeper insights into the company's financial health and market position.
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