RBC Capital Markets initiated coverage on IQVIA Holdings Inc. (NYSE:IQV), noting the company's biggest differentiator is its data assets. The analyst says IQVIA is the largest global contract research organization.

The analyst notes investor sentiment and EPS growth have been significantly impacted over the past 2.5 years due to persistent challenges from the COVID-19 pandemic, rising interest expenses, a declining biopharma funding environment, and weaker discretionary and commercial demand.

Also Read: IQVIA ‘Is A Solid Investment' With Strong Competitive Positioning, Analyst Says After Better Than Expected Q2 Earnings.

As a result, the stock has underperformed the S&P 500 by about 26% since Q1 2022.

RBC writes that IQVIA offers the best exposure to the vast AI and data opportunities in drug development, boasting one of the largest healthcare data collections in the industry.

The company manages over 61 petabytes of data and 1.2 billion patient records from more than 150,000 data suppliers.

IQV estimates that in 2023, biopharma companies spent around $50 billion on outsourced clinical drug development that could have been addressed by IQVIA's solutions, representing a 17% market penetration compared to their $8.4 billion R&D revenue for the year.

IQV also suggests another $150 billion in spending across other business areas, indicating a 4–5% market penetration in these segments.

RBC initiates with an Outperform rating with a price target of $275. Looking ahead, RBC Capital notes that four macro analyses/models indicate that the fading headwinds will lead to a significant rebound in EPS growth, which will likely push IQVIA's valuation back toward its historical average.

• Biotech Funding: Significant acceleration in Q1, which is a longer-term indicator and also influences EBP, now comprising ~25% of R&D bookings.
• Industry R&D: The analyst model shows upward momentum into 2025, a shorter-term indicator.
• Clinical Trials: Phase 3/4 trials have increased in 2024, reflecting current trends.
• FDA Approvals: There has been a notable rise in FDA NME/BLA approvals in 2023.

Price Action: IQV stock was down 0.49% to $247.59 at the last check on Wednesday.

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