On Mar 10, Zacks Investment Research upgraded ICON Public Limited Company ICLR to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
ICON has been witnessing rising earnings estimates over the past month on the back of stellar fourth quarter results. This contract research organization has delivered positive earnings surprises in the last four quarters with an average of 12.9%.
ICON reported fourth-quarter 2014 adjusted earnings per share (EPS) of 87 cents, which comfortably beat the Zacks Consensus Estimate of 76 cents. Adjusted EPS also surged 64.2% from the year-ago quarter. The $140 million share buyback program that was completed during the quarter boosted adjusted EPS results by lowering the share count.
ICON also provided positive outlook for 2015. The company expects revenues for 2015 in the range of $1.61–$1.67 billion, exhibiting growth of 7%–11%. Organic revenue growth at constant currency (cc) is expected in the band of 6%–10%. EPS is expected to increase 20%–25% to reach $3.40–$3.60.
ICON also completed the buyout of MediMedia Pharma Solutions, which is expected to complement its existing offering by adding scientific communication services. The company also plans to create cross-selling opportunities for its clinical services as the client base of MediMedia Pharma does not significantly overlap with ICON. This is essentially a key long-term growth driver for the company.
Estimate Revisions
The Zacks Consensus Estimate for 2015 increased 9.9% (32 cents) to $3.56 per share as most of the estimates were revised higher over the last 30 days. The current estimate is within the guidance range provided by the company.
For fiscal 2016 also, most of the estimates were revised upward over the same time frame, which lifted the Zacks Consensus Estimate by 7.4% (27 cents) to $3.92 per share.
Other Stocks to Consider
Some other top-ranked stocks in the medical sector are Affymetrix AFFX, Luminex LMNX and Abaxis ABAX. All the three stocks sport a Zacks Rank #1.
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