This healthcare contract researcher recently acquired a clinical trial company, beat its earnings forecasts, and its earnings estimates are rising.
ICON (ICLR 45)
from Upside
Irish health-care company ICON (ICLR) is a standout among the 41 life sciences stocks in Quadrix, earning an Overall score of 94 compared to the industry average of 41. ICON, a leading contract research organization (CRO), is hired by health-care companies to perform clinical trials. Drug giant Pfizer is the largest customer, representing nearly 30% of annual sales.
Shares of ICON have been choppy, partly reflecting concerns that Pfizer’s potential acquisition of AstraZeneca would lead to cutbacks in CRO-related spending. Despite the worries, ICON is positioned for solid growth, as companies are increasingly turning to outside firms to perform medical research.
For 2014, rising analyst estimates target per-share earnings of $2.37, up 34%. Yet shares trade at a reasonable 16 times expected current-year earnings. ICON is being initiated as a Best Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, June 2, 2014