IQVIA Holdings Inc.’s IQV top line continues to benefit from its solid technological suite and strategic collaborations. The company’s growing presence in emerging markets like Asia-Pacific and Africa should enable it to leverage the growth opportunities in the life sciences industry.
Shares of IQVIA Holdings have gained 23.7% in the past year, significantly outperforming the 0.7% rise of the industry it belongs to. The Zacks S&P 500 composite declined 5.7% in the said timeframe.
It has an expected long-term (three to five years) earnings per share growth rate of 13.6%. Moreover, earnings are expected to register 13.1% growth in 2019.
However, the company faces its share of headwinds. High debt laden balance sheet may limit its future expansion and worsen its risk profile. International presence exposes the company to foreign currency exchange rate fluctuations. In spite of these headwinds, we believe that the company has enough positives that justify the stock’s retention in investors’ portfolio.
Factors Driving IQVIA Holdings
Solid Technological Suite and Strategic Collaborations
IQVIA Holdings looks strong on the back of its 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.
The company secured major deals for its tech offerings from new and old clients in the first three quarters of 2018. Strategic collaborations include agreement with Roche, for the deployment and usage of IQVIA commercial technologies globally; partnership with Genomics England to build a real-world research platform, which integrates clinical and de-identified genomics data; and a technology deal with Theramex (a global pharmaceutical company dedicated to women’s health).
Launch of a SaaS eConsent tool for use in clinical trials and development of SaaS safety platform, aimed at lowering cost and complexity of pharmacovigilance and enhancing organization’s focus on patient safety, are the other major positives.
Growth Opportunities From Emerging Markets
IQVIA Holdings serves the life sciences industry (a major part of the global healthcare system) with the help of advanced analytics, technology solutions and contract research services. The company’s vast geographic presence should act as a boon. The IQVIA Institute projects spending on pharmaceuticals in emerging markets to witness compound annual growth rate (CAGR) of 6-9% through 2022.
The company expects multiple acquisition opportunities across the industry. Life sciences organizations are expected to commercialize their operations in emerging markets just as they did in the developed markets. This growing presence in emerging markets like Asia-Pacific and Africa will provide more growth opportunities for IQVIA Holdings in the life sciences industry.
We are impressed with IQVIA Holdings’ consistent efforts of rewarding its shareholders in the form of share repurchases. In the first nine months 2018, the company repurchased shares worth $792 million. In 2017, 2016 and 2015, IQVIA Holdings repurchased shares worth $2.62 billion, $1.09 billion and $516 million, respectively. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business. These shareholder-friendly initiatives instill investors’ confidence in the stock.
Zacks Rank & Stocks to Consider
IQVIA Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the broader Zacks Business Services sector include Booz Allen Hamilton BAH, Waste Connections WCN and Republic Services RSG, each carrying a Zacks Rank #2 (Buy). Long-term expected EPS (three to five years) growth rate for Booz Allen Hamilton, Waste Connections and Republic Services is 14.4%, 11.7% and 10.7%, respectively.
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