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On Tuesday, TD Cowen adjusted its price target for Medpace Holdings Inc . (NASDAQ: NASDAQ:MEDP), a clinical contract research organization (CRO), reducing it slightly from $372.00 to $370.00. With the stock currently trading at $344.53 and analyst targets ranging from $296 to $400, TD Cowen maintained a Buy rating on the company's stock. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period.
TD Cowen's analysis suggests that Medpace's financial performance in 2025 could face headwinds due to a potential decline in net new awards in 2024. The company has demonstrated strong fundamentals, with revenue growing 16.2% in the last twelve months and maintaining a robust 67.2% gross profit margin.
The firm emphasizes the long-term prospects, believing that Medpace is well-positioned to capitalize on the expected growth in biotech funding. This growth is seen as crucial for the company to not only foster award growth but also to mitigate the high cancellation rates currently experienced by Medpace.Want deeper insights? InvestingPro subscribers get access to over 30 additional premium tips and comprehensive financial metrics for Medpace.
The research firm adjusted its adjusted earnings per share (EPS) estimates for Medpace for the years 2024 and 2025 to $11.83 and $12.29, respectively. The previous estimate for 2025 was $12.35. Currently trading at a P/E ratio of 29.1x and with a PEG ratio of 0.85, the stock appears reasonably valued relative to its growth prospects. The new price target is derived from a revised discounted cash flow (DCF) analysis. According to TD Cowen, this analysis suggests that Medpace shares can trade at 30 times the firm's 2025 adjusted EPS estimate of $12.29 and 26 times its 2025 free cash flow (FCF) estimate of $431 million.
The analyst at TD Cowen highlighted the importance of biotech funding for Medpace, indicating that it is a key driver for the company's growth and a factor in reducing cancellation rates. The commentary reflects a positive outlook on Medpace's ability to benefit from an increase in evidence-based programs (EBP) as opposed to large pharma, positioning it favorably within the clinical CRO industry.
Medpace's stock performance and future prospects are closely tied to the trends in the biotech sector, particularly with regard to funding and project awards. The slight adjustment in the price target by TD Cowen reflects a meticulous analysis of these factors and their potential impact on the company's financials in the coming years.
In other recent news, Medpace Holdings, Inc. reported a significant increase in both revenue and net income in its third-quarter earnings call for 2024. The company's revenue rose by 8.3% year-over-year to $533.3 million, while net income grew by 36.7% to $96.4 million. These financial gains occurred despite an ongoing trend of higher backlog cancellations, largely attributed to funding issues among clients.
In addition, Medpace's EBITDA saw a 31.7% year-over-year increase, reaching $118.8 million for the quarter. The company revised its full-year revenue guidance to between $2.09 billion and $2.13 billion, with EBITDA projections ranging from $450 million to $470 million.
Analyst firm Baird recently adjusted the price target on shares of Medpace, increasing it to $354 from the previous $349, while maintaining a Neutral rating. Baird acknowledges Medpace's strong market position and impressive long-term growth prospects despite short-term concerns primarily related to the sector's current disarray and the recent biotech funding environment.
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