UPDATE: ISI Group Upgrades ICON plc to Strong Buy, Reiterates $49 PT Following Weaker PRXL Results

In a report published Thursday, ISI Group analyst Ross Muken upgraded the rating on ICON plc ICLR from Buy to Strong Buy, and reiterated the $49.00 price target. In the report, ISI Group noted, “Tuesday evening one of ICLR's close CRO competitors, PRXL, released weaker than anticipated quarterly results. In particular, PRXL reported new business wins below consensus ($394 MM vs. ST of $543 MM) driving a book-to-bill of 0.88x (vs. analyst's expectations of 1.18x). The market reaction was that PRXL's results are symptomatic of a slowing in demand across late-phase and that fundamentals are now in danger, with the read-through particularly evident in shares of ICLR (stock down ~7% Wednesday). Ultimately, we believe that the move in ICLR is an overreaction, with the key tenants of our bull thesis unchanged, including ICLR's favorable positioning within the context of increased outsourcing as well as meaningful margin upside from current levels. As such we are using today's downward move as an opportunity to upgrade shares to Strong Buy, while maintaining our price target of $49.00 (representing >20% upside from current levels).” ICON plc closed on Wednesday at $39.94.