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IQVIA (IQV) Rides on Life Sciences Strength, Debt Woes Stay

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IQVIA Holdings Inc. (IQV - Free Report) is currently benefiting from its strong foothold in the life sciences space and a well-diversified client base.

The company recently reported better-than-expected fourth-quarter 2020 results. Adjusted earnings per share of $2.11 beat the Zacks Consensus Estimate by 5% and improved 21.3% on a year-over-year basis. Total revenues of $3.29 billion outpaced the consensus estimate by 4.7% and increased 13.9% year over year.

The company’s shares have gained 29.7% over the past year, outperforming the 23.3% rally of the industry it belongs to.

Sophisticated Information, Analytics and Technology Infrastructure

IQVIA’s enormous treasure trove of information is a distinguishing asset and also perhaps a big barrier to entry for competitors. The company has a huge collection of healthcare information that encompasses more than one billion comprehensive, longitudinal, non-identified patient records across sales, prescription and promotional data, electronic medical records, medical claims, genomics, and social media. Its burgeoning information set contains around 45 petabytes of proprietary data sourced from around 150,000 data suppliers and cover more than one million data feeds globally. The company delivers information and insights on roughly 85% of the world’s pharmaceuticals. IQVIA’s unique ability to standardize, organize and integrate this information through applying sophisticated analytics and global technology infrastructure helps it build a strong client base.

A set of robust capabilities places IQVIA strongly in the life sciences space and positions it to make most of the market opportunities. The company has a strong healthcare-specific global IT infrastructure, analytics-driven clinical development capabilities, a robust real-world solutions ecosystem and a growing set of proprietary clinical and commercial applications that allows it to grow and retain relationships with healthcare stakeholders. The company’s combined offerings of research and development, and commercial services has been helping it to develop trusted relationships, resulting in a diversified base of over 10,000 clients in over 100 countries.

IQVIA’s addressable market size is around $260 billion and consists of outsourced research and development, real-world evidence and connected health, and technology-enabled clinical and commercial operations markets. The company aims to expand and penetrate these markets through innovating and improving its offerings using its information, advanced analytics, transformative technology and significant domain expertise.

Debt-heavy Balance Sheet

Total debt at the end of fourth-quarter 2020 was $12.5 billion, up from $12.3 billion at the end of the prior quarter. The total-debt-to-total-capital ratio of 0.67 is in line with the previous quarter’s figure. A high debt-to-capitalization ratio indicates higher risk of insolvency in challenging times. Further, the company’s cash and cash equivalent of $1.9 billion at the end of the fourth quarter was well below this debt level, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $149 million.

Zacks Rank and Stocks to Consider

IQVIA currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Business Services sector are Gartner (IT - Free Report) , NV5 Global (NVEE - Free Report) and TeleTech Holdings (TTEC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Gartner, NV5 Global and TeleTech is 13.5%, 18% and 19.4% respectively.

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