INVESTMENT THESIS
IQVIA Holdings Inc. (NYSE: IQV) is BUY. It also beat consensus estimates for both revenue and earnings for the fourteenth straight quarter. While the pandemic may continue to have a limited impact on earnings in the near term, management believes that the most significant COVID-related impact on the business has now passed.
RECENT DEVELOPMENTS
The company initially prohibited nearly all travel, closed facilities, and asked most of its staff to work remotely. It also added bandwidth VPN capacity to enable remote working and avoid service disruptions. In order to mitigate disruptions to clinical trials while ensuring patient safety, the company increased its remote monitoring visits and leveraged its existing drug delivery and home health services for activities such as at-home lab draws. However, management said that it has recently seen an improvement in the number of on-site monitoring visits, with roughly 70% of the sites becoming accessible by the time of the 3Q earnings release.
IQVIA is also helping to develop new treatments, with about 20% of its third-quarter contracted service bookings associated with COVID-related trials, and is assisting in four of the five Phase III trials that are part of Operation Warp Speed.
The company has won 125 contracts since its launch, including 45 new clients so far in 2020.
While the full OCT suite will be released by the end of 2020, the company has already begun conducting virtual studies spanning CNS, oncology, and digital therapeutics.
EARNINGS & GROWTH ANALYSIS
It also noted that it is seeing a return to on-site monitoring visits, with on-site visits exceeding remote visits.
While our revised estimate still implies an earnings decline of about 1% this year, we believe that the company has past the worst of the pandemic downturn, and expect a return to growth in the fourth quarter.
VALUATION
On October 27, BUY-rated IQV closed at $159.14, down $3.03.
Source: Argus
