It's been a pretty great week for IQVIA Holdings Inc. (NYSE:IQV) shareholders, with its shares surging 11% to US$143 in the week since its latest quarterly results. It looks like a credible result overall - although revenues of US$2.8b were what the analysts expected, IQVIA Holdings surprised by delivering a (statutory) profit of US$0.42 per share, an impressive 70% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from 20 analysts covering IQVIA Holdings is for revenues of US$10.7b in 2020, implying a small 4.1% decline in sales compared to the last 12 months. Per-share earnings are expected to climb 16% to US$1.28. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$10.9b and earnings per share (EPS) of US$1.10 in 2020. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of US$153, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic IQVIA Holdings analyst has a price target of US$175 per share, while the most pessimistic values it at US$120. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 4.1% revenue decline a notable change from historical growth of 22% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - IQVIA Holdings is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IQVIA Holdings following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$153, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple IQVIA Holdings analysts - going out to 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for IQVIA Holdings (1 is potentially serious) you should be aware of.
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