On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on IQVIA Holdings (NYSE: NYSE:IQV), reducing the price target to $260 from $265, yet reaffirming a Buy rating on the stock. Currently trading at $203.20 with a market capitalization of $37.5 billion, IQVIA appears undervalued according to InvestingPro analysis.
The revision follows IQVIA's Investor Day, which the analyst described as "upbeat" in comparison to the current sentiment among Clinical Research Organization (CRO) investors. The event, which was well-attended, presented a preliminary 2025 outlook that aligns with the lower end of buy-side expectations.
The analyst from Deutsche Bank highlighted IQVIA's long-term growth algorithm, projecting 6-9% constant currency (CFx) growth, which is consistent with the company's historical performance. This aligns with the company's 8% revenue CAGR over the past five years.
According to the analyst, this growth trajectory is something investors can count on with greater confidence, especially as it contrasts with the higher expectations set during the post-pandemic phase. InvestingPro data shows 15 analysts have recently revised their earnings expectations downward, suggesting a more conservative outlook.
IQVIA's Investor Day showcased the company's strategic plans and financial targets for the coming years, providing insights into its potential to yield an attractive risk-adjusted return by 2025. As the market starts to anticipate improvements in end markets, IQVIA's stock is seen as well-positioned to benefit from these developments.
The analyst's remarks suggest that IQVIA's approach to growth is pragmatic and grounded in achievable targets, which could offer a more reliable investment thesis for those looking to the future. InvestingPro analysis reveals the company maintains a GREAT financial health score of 3.1, with particularly strong profitability metrics. The company's emphasis on delivering steady growth, as opposed to overly ambitious goals, appears to resonate with the analyst's perspective. Get access to 8 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
The new price target of $260 reflects a slight adjustment, yet the maintained Buy rating indicates that the analyst's overall sentiment toward IQVIA Holdings remains positive. This stance is based on the belief that the company is setting forth a clear and attainable growth plan that investors can endorse moving forward.
In other recent news, IQVIA Holdings reported a 4.3% year-over-year growth in its third-quarter revenue, reaching $3.896 billion, and a 14% increase in adjusted diluted EPS to $2.84. Despite a significant cancellation, the company's backlog expanded by 8% year-over-year to a record $31.1 billion. Amid these developments, IQVIA is planning an aggressive share repurchase in Q4 2023. Analysts from Baird, Truist Securities, TD (TSX:TD) Cowen, and BTIG have adjusted their outlook on IQVIA, reducing the price target while maintaining a neutral to buy rating.
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