Icon PLC (ICLR) shares ended the last trading session 3.3% higher at $289.81. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 12.4% loss over the past four weeks. ICON plc. scored a strong price rise, driven by optimism surrounding its latest presentation at the Baird 2024 Global Healthcare Conference, held on Tuesday. Last month, the company announced the appointment of Nigel Clerkin as its new Chief Financial Off ...

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 an ...

A month has gone by since the last earnings report for Icon PLC (ICLR) . Shares have added about 2.3% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Icon PLC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. ICON Q2 Earnings Surpass Estimates, Margins Expand ICO ...

Company Performance - ICON plc reported second-quarter 2024 adjusted earnings per share of $3.75, reflecting a 20.6% increase from the same period last year and exceeding the Zacks Consensus Estimate by 1.7% [1] - Total revenues increased by 4.9% year over year to $2.12 billion, with a 5.3% rise at constant exchange rates, although this figure missed the Zacks Consensus Estimate by 0.6% [2] - Selling, general and administrative expenses rose by 3.5% to $194.5 million during the quarter [3] - Cumulative cash flow from operating activities was $545.7 million, up from $379.4 million in the prior-year period [4] - The company ended the quarter with cash and cash equivalents of $506.6 million, compared to $396.1 million at the end of the first quarter, and had a net debt balance of $2.9 billion [13] Guidance and Outlook - ICON updated its full-year 2024 guidance, projecting adjusted earnings per share in the range of $15.00-$15.20, an increase from the previous guidance of $14.65-$15.15, indicating year-over-year growth of 17.3-18.8% [15] - The company expects revenues to be between $8.45-$8.55 billion, up from the previous guidance of $8.48-$8.72 billion, representing approximately 5% year-over-year growth at the midpoint [20] Market Position and Competitive Landscape - ICON's performance in the reported quarter reflects efficient service delivery and strong cost management, supported by favorable demand trends and strategic customer partnerships [21] - The company currently holds a Zacks Rank 2 (Hold) [22]

Financial Data and Key Metrics Changes - Revenue in Q2 was $2.120 billion, representing a year-on-year increase of 4.9% or 5.3% on a constant currency basis [24][35] - Adjusted EBITDA was $450.4 million for the quarter, an increase of 8.7% year-on-year, resulting in an adjusted EBITDA margin of 21.2% [37][35] - Adjusted net income attributable to the group for the quarter was $312.6 million, equating to adjusted earnings per share of $3.75, an increase of 20.6% year-over-year [40] - Gross margin for the quarter was 29.9%, consistent with Q1 2024 and an increase of 30 basis points from Q2 2023 [25][35] - Total SG&A expense was $183.5 million, or 8.7% of revenue, down from 9.1% in the prior year [25][35] Business Line Data and Key Metrics Changes - Net business wins grew by 7% year-over-year, with a backlog increase of 10% [3][33] - The backlog reached a record $23.8 billion, representing a 9.9% year-over-year increase [23] - The large pharma segment showed strong performance, particularly in full-service solutions and operational delivery services [34][55] Market Data and Key Metrics Changes - Customer concentration in the top 25 customers decreased, with the top five representing 24.7% of revenue [24] - DSO was 51 days at June 30, 2024, a decrease of one day from Q2 2023 [42] - The company noted a healthy pipeline of opportunities, with continued growth in RFP flow across customer segments [4][55] Company Strategy and Development Direction - The company remains focused on M&A as a priority for capital deployment, seeking strategic assets to enhance service offerings [27][48] - A strategic initiative is to extend leadership in the large pharma market through blended solutions [65] - The company aims to mitigate backlog burn rates and improve project execution through its global business services model [95][131] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding customer sentiment and midterm growth, particularly in the large pharma segment [55] - The company expects revenue to be in the range of $8.45 billion to $8.55 billion for the full year 2024, reflecting a 4.1% to 5.3% increase over 2023 [49] - Delays in COVID-related projects are anticipated to impact revenue, with expectations that COVID-related revenue will be approximately 1.5% to 2% of total revenue for 2024 [60][61] Other Important Information - The company completed a $2 billion bond offering to refinance debt, resulting in a capital structure with approximately 72% of debt at fixed rates [46][47] - The effective tax rate for the quarter was 16.5%, with expectations to maintain this rate for the full year [39] Q&A Session Summary Question: On capital deployment, can the company do both buybacks and M&A? - Management indicated that they are focused on M&A but have authorization for a share repurchase program of up to $500 million if suitable opportunities do not arise [20][48] Question: What is the outlook for large pharma and biotech? - Management sees continued growth in large pharma and a constructive improvement in the biotech market, despite some funding attenuation [55][78] Question: How does the company view the pricing environment? - The pricing environment has become more competitive, particularly in large pharma, but management remains confident in their ability to deliver margins above proposed levels [118][123] Question: What are the expectations for backlog burn rates? - Management expects some challenges with backlog burn rates but is implementing strategies to mitigate these issues [95][131] Question: Can the company provide an update on enrollment delays? - Enrollment delays are not cancellations, and the company is working closely with partners to ensure timely execution of trials [59][111]

Icon PLC (ICLR) came out with quarterly earnings of $3.75 per share, beating the Zacks Consensus Estimate of $3.69 per share. This compares to earnings of $3.11 per share a year ago. These figures are adjusted for nonrecurring items. Over the last four quarters, the company has surpassed consensus EPS estimates four times. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the ear ...

Financial Performance - Revenue for Q2 2024 was $2,120.2 million, representing a year-over-year increase of 4.9% or 5.3% on a constant currency basis[6]. - Adjusted earnings per share for Q2 2024 increased by 20.6% to $3.75 compared to $3.11 in Q2 2023[7]. - Net business wins for Q2 2024 were $2,579 million, reflecting a 6.6% increase compared to Q2 2023, with a book-to-bill ratio of 1.22[10]. - Adjusted EBITDA for Q2 2024 was $450.4 million, representing 21.2% of revenue and an 8.7% increase year-over-year[8]. - GAAP net income for Q2 2024 was $146.9 million, resulting in diluted earnings per share of $1.76, a 25.7% increase from Q2 2023[7]. - Year-to-date revenue for 2024 was $4,210.5 million, reflecting a year-over-year increase of 5.3%[13]. - Net income for the six months ended June 30, 2024, was $334,348, a 44.1% increase compared to $232,252 for the same period in 2023[25]. - Adjusted EBITDA for the six months ended June 30, 2024, reached $894,441, reflecting a 10% increase from $813,369 in the prior year[27]. - Adjusted diluted net income per Ordinary Share for the six months ended June 30, 2024, was $7.22, up from $6.01 in 2023, representing a growth of 20.2%[27]. Cash Flow and Assets - Cash generated from operating activities for Q2 2024 was $218.6 million, with cash and cash equivalents at $506.6 million as of June 30, 2024[11]. - Cash and cash equivalents at the end of the period rose to $506,553, compared to $270,176 at the end of June 30, 2023, marking an increase of 87.5%[25]. - The company reported a net cash provided by operating activities of $545,665 for the six months ended June 30, 2024, compared to $379,381 in the same period of 2023, an increase of 43.8%[25]. - Total current assets increased to $3,603,716, up from $3,411,470, representing a growth of 5.6%[23]. - Total assets slightly decreased to $16,968,861 from $16,989,863, a decline of 0.1%[23]. Liabilities and Equity - Total liabilities decreased to $7,383,735 from $7,749,120, a reduction of 4.7%[23]. - Retained earnings increased to $2,768,067, up from $2,433,719, indicating a growth of 13.8%[23]. Guidance and Backlog - Full-year 2024 revenue guidance has been updated to a range of $8,450 - $8,550 million, indicating a year-over-year growth of approximately 5% at the midpoint[5]. - The closing backlog as of June 30, 2024, was $23.8 billion, an increase of 9.9% compared to Q2 2023[10]. Other Financial Activities - The company successfully refinanced a $2 billion Term Loan Bond, securing net interest savings of approximately $110 million for 2024[10]. - The company incurred $12,559 in impairment of operating right-of-use assets and related property, plant, and equipment during the six months ended June 30, 2024[25].

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock. In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end. However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the tr ...

Core Insights - The article compares two Medical Services stocks, Icon PLC (ICLR) and GoodRx Holdings, Inc. (GDRX), to determine which is more attractive to value investors [1] Valuation Metrics - ICLR has a P/B ratio of 3.03, while GDRX has a higher P/B ratio of 5.24, indicating that ICLR may be undervalued compared to GDRX [4] - ICLR's forward P/E ratio is 22.98, slightly lower than GDRX's forward P/E of 23.04. Additionally, ICLR has a PEG ratio of 1.49, compared to GDRX's PEG ratio of 1.83, suggesting ICLR offers better value considering expected earnings growth [7] Analyst Outlook - ICLR currently holds a Zacks Rank of 2 (Buy), indicating a more favorable analyst outlook due to stronger earnings estimate revision activity, while GDRX has a Zacks Rank of 4 (Sell) [2][8] - The Value grade for ICLR is B, reflecting its attractive valuation metrics, whereas GDRX has a Value grade of D, indicating less favorable valuation [8]

Investment Thesis - ICON (ICLR) acquired PRA Health Sciences for ~$12Bn in Feb 2020, creating a new entity fully integrated by FY'21 [5] - The stock has doubled since the acquisition, with a current valuation of ~$370–$400/share based on 20x estimated post-tax earnings from FY'24–'26E [5] - The company is de-risked post-acquisition, with a 12-month total shareholder return (TSR) projected at ~18.4% and a base case CAGR of ~18% to FY'26E, reaching $559/share [6] Financial Performance - Q1 FY'21 net bookings increased by +10% YoY, with a book-to-bill ratio of 1.25–1.27x [10] - Management projects a book-to-bill ratio of 1.2x–1.3x quarterly, with an average of 1.25x for FY'24, indicating robust revenue growth of ~7% [10] - Earnings leverage is strong, with ~18% earnings growth projected on 7% sales growth, representing 2.5x earnings leverage [10] - Free cash flow (FCF) exceeds $1Bn annually, with ~$1.8Bn in NOPAT projected for FY'25/'26E [10] Valuation and Capital Deployment - The company is valued at ~20x NOPAT, supported by increasing ROICs and a capital base producing higher and more stable earnings [10] - Management has deleveraged $2Bn in debt since FY'21, with a leverage ratio of 1.8x net debt to adjusted EBITDA as of Q1 FY'24 [10] - Capital deployment opportunities include M&A and potential share repurchases, with $275M paid on Term Loan B in Q1 FY'24 [10] Growth Catalysts - Strong order book through FY'25, with a trailing 12-month book-to-bill ratio of 1.24x [10] - Earnings leverage from a high-quality business model, with the market comfortable paying >20x EBIT [10] - Valuations are supported by >$1Bn in FCF annually, increasing ROICs, and a capital base producing higher earnings [10] Historical Performance - Post-tax earnings increased from $483.5M in Sep-21 to $1,505.8M in Mar-24, with ROIC rising from 3.2% to 10.8% over the same period [15] - Free cash flow grew from $812M in Dec-21 to $1,582M in Mar-24, driven by improved post-tax margins and capital turnover [15] Future Projections - By FY'26E, the company is projected to reach ~$560/share, representing an 18% CAGR from current levels [17] - NOPAT is expected to grow from $1,505.8M in Mar-24 to $2,150.2M by FY'26E, with NOPAT per share increasing from $18.30 to $26.10 [19] - Economic earnings are projected to grow from $622.73M in FY'24E to $993.84M in FY'28E, with a cumulative sum of $4,011.92M over the investment horizon [20] Strategic Insights - The company has transformed its earnings and cash flow outlook since the PRAH acquisition, with increasing margins and capital turns [23] - Investors are comfortable paying ~20x NOPAT, valuing the company at ~$370/share today, with potential upside to $400/share on a FCF basis [23]