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Tuesday - RBC Capital Markets has initiated coverage on ICON plc (NASDAQ:ICLR), a global contract research organization (CRO), assigning an Outperform rating and setting a price target of $263.00.
The firm's analysis points to ICON's significant role in assisting biopharmaceutical clients to expedite their drug market introduction by utilizing its specialized data and technology capabilities, along with its extensive global service offerings throughout the drug development process. According to InvestingPro data, ICON maintains a strong financial health score of 3.39 (rated as GREAT), supporting RBC's positive outlook.
ICON stock has experienced a notable decline, with InvestingPro data showing a 32.81% drop over the past six months. This decrease has been attributed to a range of temporary factors that have adversely affected the company's near-term earnings per share (EPS) growth and investor confidence.
Despite these challenges, ICON remains profitable with a current EPS of $8.99, and RBC Capital's commentary suggests that as these temporary challenges dissipate, ICON is expected to see a substantial acceleration in EPS growth.
The anticipated recovery in EPS is projected to contribute to a valuation re-rating for ICON. According to RBC Capital, the company's valuation is currently near all-time lows. However, the firm foresees a potential adjustment of ICON's valuation towards its historical average of mid to high-teens next twelve months (NTM) EPS.
The coverage initiation by RBC Capital comes at a time when ICON's stock has been under pressure, yet the firm's outlook is optimistic about the company's prospects. RBC Capital's price target of $263.00 implies a confidence in ICON's ability to overcome recent headwinds and realign its growth trajectory with historical performance metrics.
In other recent news, ICON plc has reported a slight decrease in revenue to $2.03 billion, a 1.2% year-over-year dip, and a fall in gross business wins by 7.3% to $2.832 billion.
However, the company's backlog rose to a record $24.3 billion, marking a 9.4% increase year-over-year. ICON also announced stock repurchases of $100 million and authorized an additional $250 million for buybacks. The company has adjusted its full-year guidance, projecting low to mid-single-digit revenue growth.
In terms of leadership, Barry Balfe has been appointed as the new Chief Operating Officer. Balfe, who has been with ICON for over two decades, is expected to bring his extensive leadership experience to this role.
Additionally, ICON has been the subject of several analyst revisions. Truist Securities reduced its price target for the company to $284, maintaining a Buy rating, while Baird maintained its Outperform rating on ICON shares and increased the price target to $242.00. These revisions were influenced by ICON's recent reaffirmation of its near-term outlook and announcement of higher near-term share repurchase plans than previously anticipated.
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