IQVIA 'Is A Solid Investment' With Strong Competitive Positioning, Analyst Says After Better Than Expected Q2 Earnings

IQVIA Holdings Inc IQV reported a second adjusted EPS of $2.64, up from $2.43, beating the consensus of $2.57.

Provider of advanced analytics reported sales of $3.81 billion, beating the consensus of $3.79 billion.

Sales increased 2.3% on a reported basis and 3.5% at constant currency compared to the second quarter of 2023.

Technology & Analytics Solutions (TAS) revenue of $1.5 billion increased 2.7% on a reported basis and 3.8% at constant currency.

Research & Development Solutions (R&DS) revenue reached $2.15 billion, increasing 2.4% on a reported basis and 3.3% at constant currency.

Excluding the impact of pass-throughs, R&DS revenue grew 3.5% on a reported basis.

Contract Sales & Medical Solutions revenue of $172 million decreased 2.3% on a reported basis and increased 2.8% at constant currency.

As of June 30, 2024, R&DS contracted backlog, including reimbursed expenses, was $30.6 billion, growing 7.7% year-over-year and 8.1% at constant currency.

The company expects approximately $7.8 billion of this backlog to convert to revenue in the next twelve months. The second-quarter book-to-bill ratio was 1.27x.

“IQVIA delivered second-quarter results at the high-end of our guidance, driven mainly by better-than-expected TAS performance,” stated Ari Bousbib, chairman and CEO of IQVIA.

Guidance: IQVIA forecasts 2024 revenues of $15.43 billion—$15.53 billion, compared to prior guidance of $15.33 billion—$15.58 billion and a consensus of $15.46 billion.

IQVIA expects 2024 adjusted EPS of $11.10-$11.30 compared to prior guidance of $10.95-$11.25 and consensus of $11.08.

The provider of clinical research services expects 2024 adjusted EBITDA of $3.71 billion—$3.77 billion, versus prior guidance of $3.7 billion—$3.8 billion.

William Blair writes that IQVIA has underperformed so far in 2024 due to skepticism around the timing and pace of recovery in its TAS business.

While R&DS sales and bookings came in slightly short of William Blair’s expectations, overall, a 1.27 times book-to-bill ratio is still solid, and the analyst is encouraged by management’s commentary that forward-looking indicators, such as RFP flow and qualified pipeline, remain healthy.

Overall, the analyst notes that IQVIA’s strong competitive positioning and healthy R&DS business make the company a solid investment, especially given its attractive valuation (it currently trades at 18.0 times 2025EPS, roughly a turn below close peer ICON Plc ICLR). William Blair reiterates an Outperform rating.

Price Action: IQV stock is up 5.88% at $237.77 at the last check on Monday.

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