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Why Is IQVIA (IQV) Up 8.6% Since Last Earnings Report?

It has been about a month since the last earnings report for IQVIA Holdings (IQV). Shares have added about 8.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is IQVIA due for a pullback? 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 Q3 Earnings & Revenues Estimates

IQVIA Holdings reported solid third-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.

Adjusted earnings per share (excluding 99 cents from non-recurring items) of $2.48 beat the consensus mark by 3.8% and improved 14.3% on a year-over-year basis. The reported figure is above the guided range of $2.34-$2.42.

Total revenues of $3.56 billion outpaced the consensus estimate by 0.5% and increased 5% year over year on a reported basis and 10.5% on a constant-currency basis. The reported figure touches the upper end of the guided range of $3.515-$3.565 billion.

Segmental Revenues

Revenues from Technology & Analytics Solutions totaled $1.4 billion, up 4.7% on a reported basis and 11.6% on a constant-currency basis.

Research & Development Solutions’ revenues of $1.98 billion increased 6.8% on a reported basis and 10.7% on a constant-currency basis.

Revenues from Contract Sales & Medical Solutions totaled $183 million, down 9% on a reported basis but up 1% on a constant-currency basis.

Operating Performance

Adjusted EBITDA was $814 million, up 11.8% year over year.

Balance Sheet and Cash Flow

IQVIA exited third-quarter 2022 with a cash and cash equivalents balance of $1.27 billion compared with $1.43 billion at the end of the prior quarter. Long-term debt (less current portion) was $12.24 billion compared with $12.6 billion at the end of the prior quarter.

IQV generated $863 million of cash from operating activities in the reported quarter, while CapEx was $165 million. Free cash flow was $698 million.

During the reported quarter, IQVIA repurchased shares worth $150 million. As of Sep 30, 2022, IQVIA had $1.38 million of its share buyback authorization outstanding.

Fourth-Quarter 2022 Guidance

IQVIA expects fourth-quarter revenues in the range of $3.654-$3.754 billion. Adjusted earnings per share are expected between $2.72 and $2.82. Adjusted EBITDA is anticipated between $904 million and $934 million.

2022 Guidance

For 2022, IQVIA’s expectation of low-to-mid-teens organic revenue growth at constant currency, excluding COVID-related work, remains unchanged. IQVIA now expects revenues between $14.33 billion and $14.43 billion compared with the prior guidance of $14.40-$14.55. Adjusted earnings per share are expected between $10.10 and $10.20 (prior guidance: $10.00 and $10.20). Adjusted EBITDA is anticipated between $3.33 billion and $3.36 billion (prior guidance: from $3.345 billion to $3.395 billion).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, IQVIA has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise IQVIA has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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