Markets

ICON (ICLR): Strong Buy on Encouraging 2015 Earnings View

Credit: Shutterstock photo

On Oct 13, Zacks Investment Research upgraded contract research organization ICON Plc ICLR to a Zacks Rank #1 (Strong Buy). We believe that a positive 2015 outlook primarily drove the upgrade.

Why the Upgrade?

ICON reported a strong upside in earnings in the second quarter of 2015. Earnings of 95 cents per share beat the Zacks Consensus Estimate by a nickel and surged 48.4% year over year driven by considerable margin strength.

Encouraged by the robust performance, ICON raised its bottom-line projection for 2015 to a range of $3.90-$4.00 per share from the previous $3.60-$3.70.

We believe that recently signed partnerships with the likes of International Business Machines IBM and Cancer Genetics CGIX will help ICON meet this full-year earnings target.

The partnership with IBM will allow ICON to access Watson Health Cloud that stores records of 50 million patients, speeding up the selection process of prospective clinical trial patients. Access to Watson's cognitive computing abilities coupled with ICON's expertise as a global CRO will attract drug developers. This will in turn help ICON win new customers, in our view.

Meanwhile, the tie-up with Cancer Genetics will improve visibility of ICON's laboratory services, which will help it to attract big companies that have strong spending capability on clinical research. This will again eventually expand ICON's customer base.

Apart from partnerships, acquisitions are expected to drive growth for ICON. The takeover of the Niphix business (acquired from Aptiv) in Japan and the buyout of MediMedia Pharma solutions are key growth catalysts.

Additionally, new product launches like the Firecrest Patient portal and electronic informed consent solution will drive ICON's overall results.

Estimate Revision

Analysts are reasonably confident about the company's long-term prospects, as is evident from the upward estimate revisions. Over the last 90 days, the Zacks Consensus Estimate for earnings climbed 7.4% (27 cents) to $3.94 per share for full-year 2015 while the same for 2016 surged 15.2% (62 cents) to $4.69 per share.

Another Stock to Consider

One may also consider PRA Health Sciences PRAH which carries the same Zacks Rank as ICON.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

INTL BUS MACH (IBM): Free Stock Analysis Report

CANCER GENETICS (CGIX): Free Stock Analysis Report

ICON PLC (ICLR): Free Stock Analysis Report

PRA HEALTH SCI (PRAH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ICLRVYNTIBM

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More