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On Thursday, Truist Securities revised its price target for ICON plc (NASDAQ:ICLR) shares, lowering it to $208 from the previous $262, while retaining a Buy rating on the stock. The adjustment comes as the firm anticipates ICON's first-quarter results to be "noisy," with a focus on the company's business wins and cancellations during the quarter. The analysts also highlighted the likelihood that ICON will revise its 2025 outlook downward, particularly the higher end of the range, due to uncertainty in the Biotech market and delays in a BARDA study. According to InvestingPro data, five analysts have recently revised their earnings estimates downward for the upcoming period, aligning with Truist's cautious stance. Despite these concerns, InvestingPro analysis suggests the stock is currently undervalued.
ICON's shares have not performed as well as the S&P 500 since the company's fourth-quarter earnings update in 2024. The analysts believe that the shares are unlikely to see a significant positive reaction until there is clearer visibility for the company's end markets or if ICON reports stable or improving bookings trends. However, given the current trends, such improvements in the first quarter seem highly unlikely.
The analysts at Truist Securities have updated their revenue estimates for ICON for the years 2025 and 2026 to $8,076 million and $8,456 million, respectively, down from the previous estimates of $8,259 million and $8,829 million. Adjusted EBITDA estimates for the same years have also been revised to $1,650 million and $1,766 million from $1,678 million and $1,836 million. Additionally, the adjusted EPS estimates for 2024 and 2025 have been lowered to $13.58 and $15.11, respectively, from $13.82 and $15.71. Despite these revisions, ICON maintains a strong financial health score of 3.32 (rated as "GREAT") according to InvestingPro's comprehensive analysis.
The new price target of $208 is based on an 11x multiple of the company's projected adjusted EBITDA for the calendar year 2026, a decrease from the previous 13x multiple. The first-quarter book-to-bill estimate has been adjusted to 1.14x, which is below the consensus of 1.18x and the fourth-quarter book-to-bill of 1.18x. The analysts' revisions reflect their updated expectations for ICON's financial performance over the next few years. Currently trading at a P/E ratio of 16.15x, ICON shows compelling valuation metrics relative to its near-term earnings growth potential.
In other recent news, ICON plc has faced several analyst downgrades and adjustments to its financial outlook. Barclays (LON:BARC) downgraded ICON's stock rating from Overweight to Equalweight, reducing the price target to $165 from $240. This decision was influenced by the removal of BARDA contracts, which placed the company's new revenue guidance at the lower end of the forecast. Goldman Sachs also downgraded ICON from Buy to Neutral, adjusting the price target to $200, citing a weaker demand environment and extending their improvement timeline to late 2025 or 2026.
Truist Securities, however, maintained a Buy rating with a price target of $262, despite a delay in a significant COVID vaccine study. They expect the study to resume later in the second quarter of 2025. Evercore ISI echoed this sentiment, keeping an Outperform rating and a $225 price target, while acknowledging the delay could impact first-half 2025 revenue by 1-2%. Leerink Partners reduced ICON's price target to $235 but maintained an Outperform rating, highlighting the challenges posed by the trial delay and its impact on the company's financials.
The delay in the COVID vaccine study is expected to affect ICON's revenue for the first half of 2025, although the company has reiterated its full-year guidance. Despite the setbacks, analysts from firms like Truist and Evercore remain optimistic about ICON's long-term prospects, while others like Barclays and Goldman Sachs express caution in the near term. Investors and analysts are closely monitoring ICON's performance as the company navigates these challenges.
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