IQVIA is one of the larger CROs with 86,000 employees who operate in over 100 countries. The company said it processes over 100 million patient records annually. Besides its size, what sets the company apart is its leadership in decentralized clinical trials, which helps keep costs down and increases the diversity of the patient pool.
The company has three segments: research and development solutions, technology and analytics solutions, and contract sales and medical solutions. Over the past decade, IQVIA has grown revenue by 183%.
Like Icon, 2022 was a strong year of growth for IQVIA with yearly revenue of $14.4 billion, up 3.9%. Full-year EPS grew 15.6% to $5.72.
The company's 2023 guidance said it expected revenue to be between $15.2 billion and $15.4 billion, showing growth of between 5.1% to 6.9%. If the company can hit those numbers, it will be the 13th consecutive year it has improved revenue.
But more importantly, IQVIA has been hugely profitable over the last three years. While its trailing-12-month revenue increased a modest 29%, its net income shot up 407%, driving up net margins by over five and a half percentage points (or 550 basis points), to 7.6%. Despite the pandemic years, management has ensured that the business remains highly profitable amid slowing sales growth.
From a valuation standpoint, IQVIA's shares have lost 33% of their value since peaking in Dec. 2021. But that means its shares are now trading quite cheaply despite the massive earnings growth. At 33 times trailing-12-month earnings, IQVIA's PE ratio has actually fallen over 50% in the last 15 months.
Wall Street analysts expect IQVIA to generate nearly 12% earnings growth annually over the next five years. With shares trading relatively cheaply from a historical standpoint, once the market realizes that IQVIA grows earnings faster than its revenue, shares could rally more than 10% this year, and even more after that.
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