The brokerage set a price target of $35, which represents a potential upside of 14 percent over Friday's close.
"It should grow ahead of the industry and more profitably without meaningful capital requirements, supporting double-digit revenue and EPS growth over the long term," analyst Erin Wilson wrote in a note.
While the company conducts clinical trials across all major therapeutic categories, its areas of strength include cardiology, metabolic diseases, oncology, endocrinology, CNS, anti-viral and anti-infective (AVAI). The company generates 85 percent of its revenue from small and mid-size biotech customers.
Wilson sees Medpace's industry-leading revenue growth and superior profit profile (30 percent EBITDA margin vs. peer average of about 20 percent) as sustainable, given strict adherence to its highly cost-efficient, full-service operating model.
Meanwhile, the analyst estimates the overall CRO market at $29 billion, rising 6–8 percent annually, a trajectory Medpace should consistently exceed over the longer term. Wilson projects that 41 percent of clinical development is outsourced, a metric is expected to rise to 50 percent by 2020.
Wilson expects EPS of $1.47 on revenue of $367 million for 2016, and EPS of $1.63 on revenue of $414.6 million for 2017.
At time of writing, shares of Medpace fell 3.85 percent to $29.52.
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