Icon (ICLR) AI Stock Analysis

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Icon

(NASDAQ:ICLR)

81Outperform

Icon's strong financial health and strategic cost management are key strengths, supporting its growth potential. However, technical indicators and valuation suggest caution, with mixed earnings results and market volatility presenting challenges. The stock is well-positioned for long-term growth, yet near-term uncertainties exist.

Positive Factors

Cost Management

ICLR's proven track record of cost based management and ability to repurchase significant amounts of stock should help offset near-term choppiness.

Financial Performance

ICLR reported a quarter that showed signs of stabilization to modest improvement.

Share Repurchase Program

ICLR's recently-increased share repurchase authorization may allow the company to take advantage of the depressed stock valuation.

Negative Factors

R&D Cuts Risk

Potential for further large pharma R&D cuts presents risk to bigger CROs like ICLR.

Revenue Impact

The lost revenue from the trial delay will be felt, with potential decremental margin risk due to idle resource allocation.

Trial Cancellations

There is an elevated level of trial cancellations that continues to impact the broader CRO space, with more muted bookings in large pharma vs. biotech.

Icon (ICLR) vs. S&P 500 (SPY)

Market Cap

$11.63B

Dividend YieldN/A

Average Volume (3M)1.10M

Price to Earnings (P/E)15.1

Beta (1Y)1.07

Revenue Growth1.99%

EPS Growth28.86%

CountryUS

Employees41,900

SectorHealthcare

Sector Strength70

IndustryMedical - Diagnostics & Research

Share Statistics

EPS (TTM)9.54

Shares Outstanding80,756,860

10 Day Avg. Volume1,394,197

30 Day Avg. Volume1,104,820

Financial Highlights & Ratios

PEG Ratio0.52

Price to Book (P/B)N/A

Price to Sales (P/S)1.80

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$213.77

Price Target Upside48.41% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

Icon Business Overview & Revenue Model

Company DescriptionICON plc (ICLR) is a global provider of outsourced development and commercialization services to pharmaceutical, biotechnology, medical device, and government organizations. The company operates within the life sciences sector, offering a comprehensive range of services that cover all stages of the clinical development process, from Phase I to Phase IV clinical trials. ICON's core services include clinical trial management, data analytics, regulatory consulting, and laboratory services, all designed to accelerate the development of new medical treatments and ensure regulatory compliance.

How the Company Makes MoneyICON plc makes money primarily through its contract research organization (CRO) services, which are sold to pharmaceutical, biotechnology, and medical device companies. The company's revenue model is based on service contracts that include clinical trial management, consulting, and laboratory testing. Key revenue streams come from long-term partnerships with major pharmaceutical companies and government organizations, which rely on ICON for their expertise in managing complex clinical trials and navigating regulatory requirements. ICON's strategic acquisitions and investments in technology and data analytics also enhance its service offerings, allowing the company to provide more comprehensive solutions to its clients and drive additional revenue.

Icon Financial Statement Overview

Summary

Icon exhibits strong financial performance with consistent revenue growth, solid profitability margins, and a robust balance sheet. Effective cash flow management supports strategic investments. However, there's room for improvement in return on equity.

Income Statement

Very Positive

Icon has demonstrated strong revenue growth, with a 2% increase from 2023 to 2024 and an impressive growth trajectory over the past five years. The gross profit margin remains robust at 29.42%, indicating effective cost management. The net profit margin is healthy at 9.55%, showing improved profitability. EBIT and EBITDA margins are strong at 13.25% and 20.62%, respectively, reflecting efficient operations and good earnings quality.

Balance Sheet

Very Positive

Icon maintains a stable financial position with a debt-to-equity ratio of 0.37, suggesting moderate leverage. The ROE stands at 8.31%, indicating decent profitability relative to equity. The equity ratio is 56.43%, highlighting a solid equity base. Overall, the balance sheet reflects a well-managed financial structure, though there's room for enhancing return metrics.

Cash Flow

Very Positive

Operating cash flow has grown steadily, supporting a strong free cash flow position. The free cash flow to net income ratio is 1.41, indicating effective cash generation relative to profitability. However, the operating cash flow to net income ratio of 1.63 suggests potential for improvement. Overall, cash flow management appears solid, with positive free cash flow growth.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.28B	8.12B	7.74B	5.48B	2.80B
	Gross Profit
2.44B	2.40B	2.21B	1.51B	808.03M
	EBIT
1.10B	956.15M	795.24M	608.47M	391.97M
	EBITDA
1.59B	1.52B	1.41B	739.43M	488.83M
	Net Income Common Stockholders
791.47M	612.34M	505.30M	153.19M	327.81M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
538.78M	380.06M	290.48M	753.92M	842.03M
	Total Assets
16.88B	16.99B	17.19B	17.39B	3.47B
	Total Debt
3.57B	3.94B	4.79B	5.60B	433.61M
	Net Debt
3.03B	3.56B	4.50B	4.84B	-406.69M
	Total Liabilities
7.35B	7.75B	8.69B	9.32B	1.59B
	Stockholders Equity
9.52B	9.24B	8.50B	8.07B	1.88B
Cash Flow		Free Cash Flow
1.12B	1.02B	421.15M	735.39M	543.67M
	Operating Cash Flow
1.29B	1.16B	563.32M	829.14M	594.72M
	Investing Cash Flow
-266.79M	-226.65M	-145.87M	-6.02B	-46.58M
	Financing Cash Flow
-837.18M	-844.04M	-864.17M	5.11B	-235.02M

Icon Technical Analysis

Technical Analysis Sentiment

Negative

Last Price144.04

Price Trends

50DMA

180.65

Negative

100DMA

194.59

Negative

200DMA

244.60

Negative

Market Momentum

MACD

-11.06

Positive

RSI

32.92

Neutral

STOCH

17.15

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ICLR, the sentiment is Negative. The current price of 144.04 is below the 20-day moving average (MA) of 167.53, below the 50-day MA of 180.65, and below the 200-day MA of 244.60, indicating a bearish trend. The MACD of -11.06 indicates Positive momentum. The RSI at 32.92 is Neutral, neither overbought nor oversold. The STOCH value of 17.15 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ICLR.

Icon Risk Analysis

Icon disclosed 57 risk factors in its most recent earnings report. Icon reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Icon Peers Comparison

Overall Rating

UnderperformOutperform

Sector (48)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ICLR	81 Outperform	$11.63B	15.10	8.44%	―	1.99%	28.86%
MEDP	77 Outperform	$9.00B	23.56	58.41%	―	11.84%	42.04%
PEN	74 Outperform	$10.53B	791.63	1.20%	―	12.86%	-84.18%
LH	68 Neutral	$18.53B	25.06	9.37%	1.30%	0.83%	89.55%
WST	65 Neutral	$15.23B	31.52	17.71%	0.39%	-1.93%	-15.47%
RVTY	57 Neutral	$11.40B	39.38	3.64%	0.29%	0.16%	-57.72%
Sector *	48 Neutral	$6.36B	1.19	-46.31%	2.67%	19.41%	1.23%

* Healthcare Sector Average

Performance Comparison

ICLR

Icon

146.74

-152.38

-50.94%

Labcorp Holdings

221.46

20.69

10.31%

RVTY

Revvity

97.62

-4.44

-4.35%

WST

West Pharmaceutical Services

212.67

-165.20

-43.72%

PEN

Penumbra

270.27

60.08

28.58%

MEDP

Medpace Holdings

305.28

-81.86

-21.14%

Icon Earnings Call Summary

Earnings Call Date: Feb 19, 2025 | % Change Since: -24.71% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with significant progress in business development and cost management, yet faced challenges with revenue decline and elevated cancellations. The demand environment remains volatile, especially in the biotech sector, impacting overall growth expectations.

Highlights

Improved Business Development Performance

Gross bookings in Q4 2024 were $3.06 billion, increasing 8% sequentially and 3% year-over-year. The backlog grew to $24.7 billion, representing an increase of 1.4% from Q3 2024 and 8.3% year-over-year.

Cost Management Success

ICON achieved its target of free cash flow of $1.1 billion for the full year 2024, an increase of 10% over 2023. The company exceeded its target of 3.5 million hours delivered in automation in 2024, aiming for over 5 million hours in 2025.

Strong Financial Position

ICON ended 2024 with a leverage ratio of 1.7x net debt to adjusted EBITDA and repurchased $500 million in shares during the year, with plans to continue repurchasing in 2025.

Positive Trends in Digital Innovation

Year-over-year, ICON delivered 10% faster site activation, 33 fewer non-recruiting sites, and a 24% increase in trials completed on time.

Lowlights

Revenue Decline

Q4 2024 revenue was $2.04 billion, representing a year-on-year decrease of 1.2%.

Elevated Cancellations

Overall cancellations in Q4 2024 totaled $651 million, impacting all divisions and pressuring near-term revenue and margin.

Margin Pressure

Adjusted EBITDA for Q4 2024 was $423 million or 20.7% of revenue, a year-on-year decrease of 5.7% from the same period in 2023.

Mixed Demand Environment

The biotech market continues to experience careful capital allocation and slower decision-making, impacting trial starts and revenue conversion.

Company Guidance

During the ICON Q4 Earnings Conference Call, the company reaffirmed its full-year guidance for 2025, citing mixed conditions in the market. ICON reported Q4 2024 revenue of $2.04 billion, marking a 1.2% year-over-year decline, while full-year 2024 revenue reached $8.28 billion, up 2% from 2023. Adjusted EBITDA for Q4 was $423 million, or 20.7% of revenue, and for the full year, it was $1.74 billion, a 2.5% increase from 2023. The net book-to-bill ratio stood at 1.18x in Q4 and 1.2x on a trailing 12-month basis, reflecting $3.06 billion in gross bookings and $651 million in cancellations. The company achieved a backlog of $24.7 billion at the end of 2024, representing an 8.3% year-over-year increase. ICON's automation strategy saved over $100 million in total costs annually, and the company repurchased $500 million in shares during 2024. Despite market volatility, ICON expressed confidence in its strategic partnerships and digital innovation strategy, projecting a continued positive outlook for 2026.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.