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Why Is IQVIA (IQV) Down 1.8% Since Last Earnings Report?

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·4 min read
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It has been about a month since the last earnings report for IQVIA Holdings (IQV). Shares have lost about 1.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.

IQVIA Surpasses Q4 Earnings & Revenues Estimates

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

Adjusted earnings per share of $2.11 beat the consensus mark by 5% and improved 21.3% on a year-over-year basis. The reported figure was above the guided range of $1.93-$2.03. Total revenues of $3.29 billion outpaced the consensus estimate by 4.7% and increased 13.9% year over year on a reported basis and 12.2% on a constant-currency basis. The reported figure came above the guided range of $3.04-$3.19 billion.

Segmental Revenues

Revenues from Technology & Analytics Solutions totaled $1.43 billion, up 17.4% on a reported basis and 15.1% on a constant-currency basis. Research & Development Solutions’ revenues of $1.68 billion increased 14.5% on a reported basis and 13.2% on a constant-currency basis. Revenues from Contract Sales & Medical Solutions totaled $189 million, down 10% on a reported and 11.9% on a constant-currency basis.

Operating Performance

Adjusted EBITDA was $735 million, up 14.5% year over year. Adjusted EBITDA margin grew to 22.3% from 22.2% in the year-ago quarter.

Balance Sheet and Cash Flow

IQVIA exited fourth-quarter 2020 with cash and cash equivalents balance of $1.81 billion compared with $1.46 billion at the end of the prior quarter. Long-term debt was $12.4 billion compared with $12.2 billion at the end of the prior quarter. The company generated $750 million of cash from operating activities in the reported quarter and CapEx was $176 million. During the reported quarter, IQVIA repurchased 102 million shares for $423 million. As of Dec 31, 2020, the company had nearly $918 million of share-repurchase authorization remaining.

First-Quarter 2021 Guidance

IQVIA expects first-quarter revenues in the range of $3.15-$3.20 billion. The current  Adjusted earnings per share are expected to be between $1.81 and $1.87. Adjusted EBITDA is anticipated between $660 million and $675 million.

2021 Guidance

For full-year 2021, IQVIA now expects revenues in the range of $12.55-$12.90 billion compared with the prior guidance of $12.3-$12.6 billion. Adjusted earnings per share are expected to be between $7.77 and $8.08 compared with the prior guidance of $7.65-$7.95. Adjusted EBITDA is anticipated to be between $2.760 billion and $2.840 billion compared with the prior guidance of $2.725-$2.800 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted -5.04% due to these changes.

VGM Scores

At this time, IQVIA has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. 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. 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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