The shares of this healthcare technology company were recently upgraded by Goldman Sachs and SunTrust Robinson Humphrey, to ‘Buy’.
QVIA Holdings Inc (IQV)
From Argus Weekly Staff Report
Our rating on IQVIA Holdings Inc. (IQV) is BUY and our target price is $112, raised from $110. The company, formerly called Quintiles, merged with IMS Health, a pharmaceutical data provider, in October 2016, and took the name IQVIA in November 2017. By combining with IMS Health, it gained a trove of healthcare records that will help drug manufacturers target appropriate patients for clinical trials. In addition, we expect the company to continue to benefit from solid organic sales growth and the launch of its Orchestrated Customer Engagement (OCE) technology solution.
We also look for share buybacks to boost EPS.
Based on the company’s high book-to-bill ratio, large backlog, diversified client base, and favorable industry trends (including growing R&D budgets at pharma companies), we expect continued growth in the coming quarters.
IQVIA reported 4Q17 adjusted net income of $300 million and adjusted EPS of $1.40, up from $1.09 in 4Q16 and above the consensus forecast of $1.34. We are raising our 2018 adjusted EPS forecast to $5.40 from $5.35 to reflect the fourth-quarter earnings surprise, the addition of new multiyear contracts on the company’s OCE platform, and management’s guidance. We are also setting a 2019 estimate of $6.15.
We think that IQV shares are attractively valued at current prices, above the midpoint of their 52-week range of $76-$111. While the shares have fallen from their all-time high in early November 2017, the stock’s relative strength index (RSI) of 37 suggests that it is not very far from oversold territory.
IQV shares trade at 17.9-times our 2018 EPS estimate, below the average of 22.4 for peers that include CRL, ICLR, and SYNH, and in the lower half of the five-year historical range of 15.5-24.8.
However, given the company’s industry leadership and above-peer-average revenue and earnings growth prospects, we think that a higher valuation is warranted. Our revised target price of $112, raised from $110, implies a multiple of 20.8-times our 2018 estimate, slightly above the midpoint of the historical range.
Jim Kelleher, CFA, Argus Weekly Staff Report, www.argusresearch.com, 212-425-7500, April 13, 2018