Reasons to Retain ICON Stock in Your Portfolio Now

ICON plc ICLR is well-poised to grow in the coming quarters, driven by its meaningful strategic additions. The company is committed to improving patient access and engagement strategy. Meanwhile, concerns about the adverse macroeconomic impacts as well as currency fluctuations remain, which may hamper ICON's performance.

In the past year, this Zacks Rank #3 (Hold) company has gained 27% compared with the industry's 9.9% growth and 27.1% rise of the S&P 500 composite.

The leading healthcare intelligence and clinical research organization has a market capitalization of $26.85 billion. The company's earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 0.92%.

Let's delve deeper.

Tailwinds

Focus on Patient Access & Engagement Strategy: ICON is continuously improving in site identification, study placement and patient recruitment and retention through its focused patient, site and data strategy.

In line with this, Accellacare, ICON's global clinical research network, is offering customers a wide range of stand-alone and integrated solutions at the site or in patients' homes as part of decentralized trials. One of the key strategic moves of ICON in 2024 was a focused rebranding of its specialized biotech solutions division, ICON Biotech.

During the second quarter of 2024, the company experienced positive constructive progress in the biotech funding area.

Image Source: Zacks Investment Research

Strategic Pacts to Drive Growth: ICON is focused on expanding its business through strategic acquisitions and partnerships. The company's acquisition of HumanFirst in January 2024 is strategically aligned with its approach to provide an enhanced integrated offering.

ICON also partnered with the U.S. Biomedical Advanced Research and Development Authority to execute a clinical trial to evaluate the effectiveness of the next-generation COVID vaccine candidates.

Headwinds

Macroeconomic Pressure: Inflation and rising labor costs could increase the cost of ICON's services, which it may not be able to recover from its customers. A sustained increase in these costs may require the company to hike the price of service offerings. These actions could adversely affect its future revenues, gross margin or both. In the second quarter, ICON registered an increase of 4.5% in the direct cost.

Foreign Exchange Translation: Foreign exchange is a major headwind for ICON as it prepares its financial statements in U.S. dollars while some of its subsidiaries operate in other currencies like the pound sterling and the euro. In addition, the company's contracts with clients, as well as expenses, are in various local currencies, thus exposing it to fluctuations in exchange rates. These could have an adverse effect on ICLR's financial results. In the second quarter, ICON registered a net foreign exchange loss of $3.3 million.

Estimate Trend

The Zacks Consensus Estimate for ICON's 2024 earnings per share has remained constant at $15.09 in the past 30 days.

The consensus estimate for 2024 revenues is pegged at $8.51 billion. This indicates a 4.8% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are TransMedix Group TMDX, Intuitive Surgical ISRG and Boston Scientific BSX.

TransMedix Group's earnings are expected to surge 255.8% in 2024. The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Its shares have gained 187.6% compared with the industry's 12.6% growth in the past year.

TMDX sports a Zacks Rank #1 (Strong Buy) at present.

Intuitive Surgical, sporting a Zacks Rank of 1 at present, has an estimated long-term earnings growth rate of 17.4% compared with the industry's 13.7%. Shares of the company have gained 61.4% compared with the industry's 12.5% growth over the past year.

ISRG's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.

Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry's 15.7%. Shares of the company have gained 47.1% compared with the industry's 13.8% growth over the past year.

BSX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

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