On Thursday, Evercore ISI updated its outlook on IQVIA Holdings (NYSE: NYSE:IQV), reducing the price target to $235 from the previous $265 while sustaining an Outperform rating on the stock. The revision follows IQVIA's third-quarter results, which according to the firm, demonstrate the company's continued outperformance in a challenging market. IQVIA Holdings has reportedly made share gains in Research & Development Solutions (R&DS) and experienced some recovery in Technology & Analytics Solutions (TAS), supported by mergers and acquisitions activity. These factors have helped counterbalance a general slowing in market growth.
The firm's analysis indicates that IQVIA is expected to see more moderate growth over the next two to three quarters. However, a rebound is anticipated in the second half of 2025 as pharmaceutical spending recovers and biotech funding increases. In the meantime, IQVIA has been effective in managing its margins, achieving improved gross margins aided in part by a favorable mix of business, despite wider macroeconomic pressures.
Evercore ISI's follow-up call with IQVIA's management provided additional insights into the company's performance and strategic direction. The firm's updated valuation now reflects a price target of $235, approximately 14 times the projected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA). This adjustment is attributed to a broader reassessment of market multiples within the sector, pending clearer signs of an upturn in pharmaceutical funding.
In summary, Evercore ISI continues to view IQVIA as a structural winner within the clinical Contract Research Organization (CRO) space. Despite the lowered price target, the firm's outlook for the company remains positive, as it expects IQVIA to navigate through the current market conditions and emerge stronger in the latter half of 2025.
In other recent news, IQVIA Holdings Inc. reported third-quarter earnings and revenue that surpassed expectations. The healthcare data and analytics provider posted adjusted earnings of $2.84 per share, slightly above the anticipated $2.81 per share. Revenue rose 4.3% year-over-year to reach $3.9 billion, just above the consensus forecast of $3.86 billion. Despite these positive results, IQVIA lowered its full-year 2024 guidance, now expecting revenue between $15.35 billion and $15.4 billion, which falls short of Wall Street's projection of $15.47 billion. The company also reduced its earnings outlook to $11.10-$11.20 per share, marginally below analysts' $11.17 estimate. This adjustment is attributed to the impact of one large program cancellation and the delay of two mega trials. Finally, the company reported an 8.6% growth in Technology & Analytics Solutions revenue to $1.55 billion, and a 1.9% increase in Research & Development Solutions revenue to $2.16 billion.
InvestingPro Insights
IQVIA Holdings' recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $37.75 billion, reflecting its significant presence in the Life Sciences Tools & Services industry. With a P/E ratio of 26.4, IQVIA is trading at a relatively low multiple compared to its near-term earnings growth potential, as highlighted by one of the InvestingPro Tips.
The company's revenue growth of 3.23% over the last twelve months, while modest, supports Evercore ISI's observation of IQVIA's continued outperformance in a challenging market. Additionally, IQVIA's EBITDA growth of 5.63% in the same period underscores its ability to manage margins effectively, as noted in the article.
An InvestingPro Tip points out that IQVIA has a perfect Piotroski Score of 9, indicating strong financial health and potentially supporting Evercore's view of IQVIA as a structural winner in the clinical CRO space. This score, along with the company's profitability over the last twelve months, suggests resilience in the face of current market conditions.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. The platform currently lists 10 more tips for IQVIA Holdings, providing a deeper understanding of the company's financial position and market outlook.
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