By:
Mia Albian, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• ICON Plc (NASDAQ: ICLR) is a Global Clinical Research Organization
(CRO) that provides services to the pharmaceutical, biotechnology, and medical
device companies. ICLR specializes in the strategic development, management and
analysis of programs that support the clinical development process, from
compound selection to Phase I-IV clinical studies.
• ICLR has a globally
diverse network by generating 41.1% of revenue from Ireland, 34.5% of revenue
from the United States, and the rest from China, Germany, and the United
Kingdom. ICLR is headquartered in Dublin, Ireland and was founded in 1990.
• ICLR recently acquired
Symphony Clinical Research, a provider of site and patient clinical trial
support services. This acquisition further enhances the company’s ability to help
solve their client’s main challenge of getting patients faster and more
efficiently.
•Management reported in
their Q3 earnings that ICLR continues to expand their relationships and
revenues from customers outside their top 10, which grew by over 20%.
• ICLR was added to the
AIM portfolio on April 12, 2013 at a price of $30.66. It is currently trading
at $145.28, showing a 373.84% increase from the initial purchase.
Key
points:
ICON Plc released Quarter
3 earnings on October 23, 2019, which were consistent with 2Q19 trends. Q3
earnings reported year-to-date revenue of $2.080 billion, representing a strong
revenue growth of 8.5% YoY. Earnings per share on a diluted basis was $5.06,
representing an increase of 13%, compared to $4.47 per share for the prior year.
ICLR increased their backlog by 12%, growing to $8.4 billion. Management
completed its existing share repurchase authorization of 1M shares in Q3. This
total compares to ~$245M in operating cash flow YTD, resulting in ICLR having the
strongest balance sheet among its peers.
The continued demand for biotechnology
and the trend for outsourced development services allows ICLR to broaden their
customer base. At the end of September, ICLR acquired Symphony Clinical
Research. ICON can now offer patients at-home trial services, which will make
it faster and more efficient for ICLR’s customers to get their patients into
clinical trials. This positions the company well to continue gaining market
share by differentiating themselves through a diverse patient network.
What
has the stock done lately?
Over the past 3 months, ICLR
has seen a change of 14.7%, with a high of $158.86 on August 19th
and a low of $138.50 on October 16th. After releasing Q3 earnings at
the end of October, the stock price increased ~5%, from $139.95 on October 23rd
to $151.62 on November 4th.
Past
Year Performance:
ICLR has a 52 Week H/L of
$165.13 to $118.10. The company was trading at a high of $165.13 in July of
2019 and at low of $118.10 in January of 2019, which represents a change of
39.8%. The company has been increasing in price throughout the last year, but
now is consistently staying in the mid-range from where the price has historically
been this past year. Overall, ICON Plc is up 23% YoY, as the company is
currently priced at $145.28, but was trading at $118.10 on January 3, 2019.
Source:
FactSet
My
Takeaway
ICLR has performed
extremely well over the last year and since the initial purchase. ICLR is
largely differentiated from their peers through its global stance, with 2/3 of
revenue generated outside of the United States. Looking forward, this company
will continue to grow as they serve diverse patient networks through services
that integrate all phases of drug development. This is a great advantage to
their company, as the CRO market is intensely competitive. ICLR may face
potential risks such as a slowdown in pharmaceutical R&D outsourcing or
lower pricing amid higher competition. However, ICON Plc continues to conduct
clinical trials globally in many of the major therapeutic areas, which is very
attractive for drug developers seeking one CRO relationship that coverall all
of their drug development.
Source:
FactSet
