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IQVIA (IQV) Down 2.2% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·4-min read

A month has gone by since the last earnings report for IQVIA Holdings (IQV). Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is IQVIA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

IQVIA Surpasses Q2 Earnings & Revenues, 2020 View Up

IQVIA Holdings reported solid second-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

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Adjusted earnings per share of $1.18 beat the consensus mark by 12.4% but decreased 22.9% on a year-over-year basis. The reported figure lies within the guided range of $1.00-$1.09.

Total revenues of $2.52 billion outpaced the consensus estimate by 4.8% but decreased 8% year over year on a reported basis and 7.1% on a constant-currency basis. The reported figure came above the guided range of $2.37-$2.44 billion.

Segmental Revenues

Revenues from Technology & Analytics Solutions totaled $1.11 billion, up 0.6% on a reported basis and 2% on a constant-currency basis. The segment accounted for 44% of total revenues.

Research & Development Solutions’ revenues of $1.24 billion decreased 13.9% on a reported basis and 13.3% on a constant-currency basis. The segment contributed 49% to total revenues.

Revenues from Contract Sales & Medical Solutions totaled $177 million, down 12.8% on a reported and 12.3% on a constant-currency basis. The segment accounted for 7% of total revenues.

Operating Performance

Adjusted EBITDA was $483 million, down 16.4% year over year. Adjusted EBITDA margin decreased to 19.2% from 21.1% in the year-ago quarter.

Operating income was $62 million, down 68.5% from the year-ago quarter. Operating income margin decreased to 2.5% from 7.2% in the year-ago quarter.

Balance Sheet and Cash Flow

IQVIA exited second-quarter 2020 with cash and cash equivalents balance of $1.11 billion compared with $927 million at the end of the prior quarter. Long-term debt of $11.9 billion was flat sequentially.

The company generated $472 million of cash from operating activities in the reported quarter and CapEx was $142 million.

Share Repurchase

With the coronavirus outbreak turning into a pandemic in March, IQVIA temporarily suspended its share repurchases. The company did not repurchase any share during the second quarter of 2020. As of Jun 30, 2020, the company had nearly $1 billion of share repurchase authorization remaining.

Third-Quarter 2020 Guidance

IQVIA expects third quarter revenues between $2.73-$2.78 billion. Adjusted earnings per share are expected to be between $1.47 and $1.55. Adjusted EBITDA is anticipated between $564 million and $582 million.

2020 Guidance

IQVIA raised its full-year guidance. The company now projects adjusted earnings between $6.10 and $6.30 compared with the prior guidance of $5.75 and $6.10 per share. Revenues are now expected between $11-$11.1 billion compared with the prior guidance of $10.6 billion and $10.9 billion. Adjusted EBITDA is now anticipated between $2,295 million and $2,345 million compared with the prior guided range of $2,200 - $2,300 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 11.47% due to these changes.

VGM Scores

At this time, IQVIA has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise IQVIA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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