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Here's Why You Should Hold Medidata Stock in Your Portfolio

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Medidata Solutions, Inc. (MDSO - Free Report) has topped estimates in the trailing four quarters. The company currently has a market capitalization of approximately $4.29 billion. However, expensive valuation, a complex cloud-based platform and stiff competition in MedTech space are headwinds.

The Zacks Rank #3 (Hold) stock has rallied 22.8% in a year’s time compared with the industry’s rise of 7.1%.

Here we take a quick look at the major headwinds that are plaguing Medidata and discuss the factors that ensure near-term recovery.

Why Should You Retain?

Medidata’s pioneering analytics and clinical technology expertise power the development of new therapies for nearly 1,000pharmaceutical companies, biotech and medical device firms, academic medical centers and contract research organizations ("CROs") globally. Notably, Medidata Clinical Cloud helps in connecting patients, physicians and life sciences professionals.

In 2018, the company expanded the use of Medidata Clinical Cloud to automate operations, increase efficiencies and gain better data visibility to accelerate 2125 oncology development program. The Medidata Implementation Team (MIT) will deploy the solution to seamlessly enhance and maximize value throughout the company. Moreover, it had earlier added regulated content and document management capabilities to the Medidata Clinical Cloud.

Lately, Massachusetts-based Idera Pharmaceuticals expanded its use of the Medidata Clinical Cloud to automate operations, increase efficiencies and gain better data visibility.

Per a research by MarketsandMarkets, the global healthcare cloud computing market is expected to reach $9.48 billion by 2020 from $3.73 billion in 2015, at a CAGR of 20.5%. This reflects solid growth prospects over the long haul.

Medidata Solutions, Inc. Price and Consensus

 

 

What’s Deterring the Stock?

Medidata competes with strong contenders like, BioClinica, Inc, IQVIA (formerly QuintilesIMS), Oracle, Parexel Informatics, Veeva Systems, Inc. and other large-scale technology providers.

The company also competes with a number of vendors offering applications and systems, like, ERT, CRF Health, Bracket, DataTrak International, Inc., Medrio, Inc., Merge Healthcare (an IBM Company), and OmniComm Systems, Inc.

Which Way are the Estimates Treading?

Unhindered by persistent issues, analysts are optimistic about Medidata.

For the current quarter, the Zacks Consensus Estimate for earnings is pegged at 36 cents, reflecting growth of 9.1% on a year-over-year basis. The same for the revenues is pegged at $162.6 million, reflecting growth of 16.1% year over year.

For 2018, the Zacks Consensus Estimate for revenues is pegged at $637.3 million, reflecting growth of 16.8%. The same for adjusted earnings for 2018 is pegged at $1.56, indicating year-over-year rise of 13.9%.

Key Picks

A few better-ranked stocks in the broader medical space are Surmodics, Inc (SRDX - Free Report) , Masimo Corporation (MASI - Free Report) and Veeva Systems (VEEV - Free Report) .

Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term earnings growth rate is projected at 14.8%. The stock carries a Zacks Rank #2.

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock sports a Zacks Rank #1.

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