Market Overview

Jefferies Downgrades ICON To Hold, Cites Lower Bookings, Sales


ICON PLC (NASDAQ: ICLR) reported a disappointing book-to-bill for 1Q16, and 2Q16 could represent the second straight quarter of low bookings and eighth quarter of low revenue. Jefferies’ David Windley downgraded the rating for the company from Buy to Hold, while reducing the price target from $80 to $78.

Analyst David Windley mentioned that the recent 14 percent rally in ICON’s shares seems to disregard the growing pressures on the company, while both near-term and long-term revenue expectations are at risk.

Slowing PFE Activity

PFE revenue has declined from ~$500M a year ago, to ~$450M in 1Q to an estimated ~$425M in 2Q16. While this decline could be difficult for ICON to offset, the headwind is likely to continue in 2017, albeit easing a little.

PFE Bookings Low

“The now-terminated AGN transaction and ongoing renewal negotiations have taken (and continue to take) attention away from regular project award activities,” Windley wrote. He added that while the company recorded the lowest book-to-bill in 3 years in 1Q16, the issues seem to have continued in 2Q, which could “pressure key revenue metrics over coming quarters.”

Non-Core Clients Unlikely TO Offset Headwind Impact

Although ICON has indicated robust book-to-bills outside of its Top 5, and these clients represented 55 percent of 1Q16 net revenue, they would need to generate over 21 percent growth for the company to achieve even the lower-end of its revenue guidance for 2016, the analyst pointed out.

Latest Ratings for ICLR

Jan 2020DowngradesBuyHold
Jan 2020Initiates Coverage OnEqual-Weight
Jan 2020Initiates Coverage OnNeutral

View More Analyst Ratings for ICLR
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Posted-In: David Windley JefferiesAnalyst Color Downgrades Price Target Analyst Ratings


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