Shares of IQVIA Holdings Inc.IQV have gained 12.5% over the past year, compared with 11.1% increase of the Zacks S&P 500 composite. In the meantime, the industry it belongs to has declined 3.6%.
The company has an expected long-term (three to five years) earnings per share growth rate of 10%. Moreover, its earnings are expected to register 25.3% growth in 2021.
Factors Driving IQVIA Holdings
IQVIA Holdings is gaining momentum from its solid technological suite. The company offers an extensive range of technology solutions in the form of cloud-based applications and related services. The company’s Software as a Service (“SaaS”) solution supports a vast range of clinical and commercial processes. By combining its database, healthcare expertise and therapeutic information collected from over 100 countries, the company creates its Global Market Insight offerings such as MIDAS, Analytics Link and Disease Insights. All these solutions and services are used by healthcare and pharmaceutical companies to organize, enhance and implement their clinical and commercial strategies in a coordinated manner. It continues to secure notable awards and deals for its tech offerings from both new and old clients.
Moreover, IQVIA Holdings’ efforts to help its clients gain an accurate and deep understanding of the entire healthcare system and its related processing by providing access to real-world data are appreciable. Such efforts should help the company strengthen its foothold in the real-world business. Meanwhile, IQVIA Holdings continues to make significant investments in the expansion of its real-world platform and capabilities.
With its increasing presence in emerging markets, IQVIA Holdings should benefit from the evolving growth opportunities in the life sciences industry. Notably, the IQVIA Institute estimates that spending on pharmaceuticals in emerging markets will expand at a CAGR (compound annual growth rate) of 5% to 8% through 2023. On the back of the expanding global healthcare system, the company is also hopeful of witnessing multiple acquisition opportunities across the industry. Life sciences organizations are also expected to commercialize their operations in emerging markets just as they did in developed markets.
IQVIA Holdings continues to witness higher interest expense due to an increase in average debt outstanding. In 2019, interest expense of $438 million increased 7.9% year over year. Additionally, the company is witnessing an increase in depreciation and amortization (D&A) due to higher intangible asset balances as a result of acquisitions. In 2019, D&A of $1.2 billion increased 5.4% year over year.
IQVIA Holdings’ global presence makes it vulnerable to the risks associated with foreign currency exchange rate fluctuations. High debt may limit the company’s future expansion and worsen its risk profile.
Zacks Rank and Stocks to Consider
IQVIA Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign DOCU, SPS Commerce SPSC and SailPoint Technologies Holdings, Inc. SAIL. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SPS Commerce and SailPoint is 47%, 15% and 15%, respectively.
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