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Why Is IQVIA (IQV) Down 2.2% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for IQVIA Holdings (IQV). Shares have lost about 2.2% in that time frame, outperforming 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 catalysts.

IQVIA Holdings Tops on Q2 Earnings, Updates ’19 View

IQVIA Holdings reported solid second-quarter 2019 results wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.53 beat the consensus mark by 4 cents and increased 18.6% on a year-over-year basis. The reported figure exceeded the guided range of $1.46-$1.51.

Total revenues of $2.74 billion outpaced the consensus estimate by $46.9 million and increased 6.7% year over year on a reported basis and 8.5% on a constant-currency basis. The reported figure exceeded the guided range of $2.66 billion- $2.71 billion.

Segmental Revenues

Revenues from Technology & Analytics Solutions (TAS) totaled $1.10 billion, up 9% on a reported basis and 11.4% on a constant-currency basis. The segment accounted for 40% of total revenues. Research & Development Solutions (R&DS) revenues of $1.44 billion increased 6.3% on a reported basis and 7.5% on a constant-currency basis. The segment contributed 52% to total revenues. Revenues from Contract Sales & Medical Solutions (CSMS) totaled $203 million, down 1.5% on a reported basis but up 1% on a constant-currency basis. The segment accounted for 7% of total revenues.

Operating Performance

Adjusted EBITDA was $578 million, up 8.4% on a reported basis. Adjusted EBITDA margin increased to 21.1% from 20.8% in the year-ago quarter Operating income was $197 million, up 15.9% from the year-ago quarter. Operating income margin increased to 7.2% from 6.6% in the year-ago quarter. Total selling, general and administrative expenses of $436 million were up 2.8% from the year-ago quarter.

Balance Sheet and Cash Flow

IQVIA Holdings exited second-quarter 2019 with cash and cash equivalents balance of $938 million compared with $936 million at the end of the prior quarter. Long-term debt at the end of the quarter was $11.3 billion compared with $11.2 billion at the end of the first-quarter 2019. The company generated $391 million of cash from operating activities in the reported quarter and spent $155 million on capex. IQVIA Holdings repurchased shares worth $236 million during the reported quarter. As of Jun 30, 2019, the company had roughly $1.9 billion of share repurchase authorization remaining.

Q3 Guidance

For third-quarter 2019, IQVIA projects adjusted earnings per share in the range of $1.53-$1.59. Revenues are expected between $2.73 billion and $2.78 billion. Adjusted EBITDA is anticipated in the range of $580-$595 million.

2019 Guidance

IQVIA Holdings updated its guidance for full-year 2019. For the full year, the company now projects adjusted earnings between $6.25 per share and $6.45 per share compared with the previously guided range of $6.20-$6.40. Revenues are now expected to be between $11.00 billion and $11.15 billion compared with the previously guided range of $10.9 billion and $11.13 billion. Adjusted EBITDA is now anticipated in the range of $2,385 - $2,415 million compared with the previously guided range of $2,375-$2,425 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, IQVIA has a nice Growth Score of B, 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 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, IQVIA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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