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Here's Why Investors Should Hold Medidata (MDSO) Stock Now

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Medidata Solutions, Inc. (MDSO - Free Report) is expected to benefit from a solid focus on cloud-based services, Rave Genomics platform, strategic acquisitions and a slew of positive developments. However, the market for clinical trial solutions is highly competitive. This, in turn, might hurt the company’s prospects over the long haul.

The stock currently has a Zacks Rank #3 (Hold).

Why Should You Retain the Stock?

Medidata’s pioneering analytics and clinical technology expertise power the development of new therapies for nearly 1,000 pharmaceutical 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 the third quarter of 2018, Medidata had 24 patient Cloud deals, including 13 new ePRO customers. The company implemented RTSM (Randomization and Trial Supply Management) along with Rave EDC.

For investors’ notice, shares of Medidata have gained 8.5% against the industry's 10.5% decline in a year’s time. The current level is also higher than the S&P 500 index's mere gain of 0.1% over the same time frame.

 

 

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.

Further, management expects gross margin to be under pressure in 2018. In the third quarter, Medidata’s gross margin contracted 310 basis points (bps) due to the SHYFT acquisition. Additionally, operating margin decreased 90 bps.

Medidata Solutions, Inc. Price and Consensus

 

Which Way Are Estimates Headed?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 36 cents per share, reflecting a 12.2% decline year over year. The same for revenues is pinned at $167.9 million, mirroring an increase of 18.9% year over year.

For the full year, the Zacks Consensus Estimate for revenues stands at $636.6 million, reflecting a 16.7% rise year over year. However, the same for earnings is pegged at $1.63, indicating 19% growth year over year.

Key Picks

A few better-ranked stocks in the broader medical space are Quidel Corporation (QDEL - Free Report) , STAAR Surgical Company (STAA - Free Report) and Veeva Systems (VEEV - Free Report) .

Quidel Corporation has a long-term expected earnings growth rate of 25% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With a Zacks Rank #1, STAAR Surgical delivered an average four-quarter positive earnings surprise of 400%.

Veeva Systems’ long-term earnings growth rate is projected at 19.3%. The stock carries a Zacks Rank #2 (Buy).

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