IQVIA (IQV) Down 31.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for IQVIA Holdings (IQV). Shares have lost about 31.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is IQVIA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

IQVIA Beats on Q4 Earnings and Revenues

IQVIA Holdings reported solid fourth-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.74 beat the consensus mark by 1.2% and increased 16% on a year-over-year basis. The reported figure exceeded the midpoint ($1.7) of the guided range of $1.65-$1.75.

Total revenues of $2.9 billion outpaced the consensus estimate by 1.9% and increased 7.7% year over year on a reported basis and 8.5% on a constant-currency basis. The reported figure came above the guided range of $2.807-$2.857 billion.

Segmental Revenues

Revenues from Technology & Analytics Solutions (TAS) totaled $1.21 billion, up 7.7% on a reported basis and 9% on a constant-currency basis. The segment accounted for 42% of total revenues.

Research & Development Solutions (R&DS) revenues of $1.47 billion increased 7.5% on a reported basis and 8.1% on a constant-currency basis. The segment contributed 51% to total revenues.

Revenues from Contract Sales & Medical Solutions (CSMS) totaled $210 million, up 8.8% on a reported and 8.3% on a constant-currency basis. The segment accounted for 7% of total revenues.

Operating Performance

Adjusted EBITDA was $642 million, up 10.1% year over year. Adjusted EBITDA margin increased to 22.2% from 21.7% in the year-ago quarter.

Operating income was $166 million, down 19.8% from the year-ago quarter. Operating income margin decreased to 5.7% from 7.7% in the year-ago quarter.

Balance Sheet and Cash Flow

IQVIA exited the quarter with cash and cash equivalents balance of $837 million compared with $863 million at the end of the prior quarter. Long-term debt at the end of the quarter was $11.5 billion compared with $11.4 billion at the end of the previous quarter.

The company generated $583 million of cash from operating activities in the reported quarter and CapEx was $137 million.

2020 Guidance

The company projects adjusted earnings between $7.15 and $7.35 per share. Revenues are now expected between $11.8 billion and $12 billion. Adjusted EBITDA is now anticipated in the range of $2,565 - $2,620 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -7.14% due to these changes.

VGM Scores

At this time, IQVIA has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, IQVIA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.