The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how IQVIA (NYSE:IQV) and the rest of the drug development inputs & services stocks fared in Q1.
Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.
The 8 drug development inputs & services stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 4%.
Thankfully, share prices of the companies have been resilient as they are up 8.4% on average since the latest earnings results.
IQVIA (NYSE:IQV)
Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE:IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.
IQVIA reported revenues of $3.83 billion, up 2.5% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with full-year revenue guidance beating analysts’ expectations and an impressive beat of analysts’ constant currency revenue estimates.
IQVIA pulled off the highest full-year guidance raise but had the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is up 1.7% since reporting and currently trades at $155.
Is now the time to buy IQVIA? Access our full analysis of the earnings results here, it’s free.
Best Q1: UFP Technologies (NASDAQ:UFPT)
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
UFP Technologies reported revenues of $148.1 million, up 41.1% year on year, outperforming analysts’ expectations by 5.9%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates.
UFP Technologies scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 20.5% since reporting. It currently trades at $237.54.
Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free.
Azenta (NASDAQ:AZTA)
Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.
Azenta reported revenues of $143.4 million, up 5.2% year on year, exceeding analysts’ expectations by 2%. Still, it was a slower quarter as it posted a significant miss of analysts’ EPS estimates.
Interestingly, the stock is up 20.7% since the results and currently trades at $30.69.
Read our full analysis of Azenta’s results here.
Charles River Laboratories (NYSE:CRL)
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE:CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Charles River Laboratories reported revenues of $984.2 million, down 2.7% year on year. This number beat analysts’ expectations by 4.6%. It was an exceptional quarter as it also recorded a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ full-year EPS guidance estimates.
Charles River Laboratories had the slowest revenue growth among its peers. The stock is up 31% since reporting and currently trades at $151.03.
Read our full, actionable report on Charles River Laboratories here, it’s free.
Medpace (NASDAQ:MEDP)
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Medpace reported revenues of $558.6 million, up 9.3% year on year. This result surpassed analysts’ expectations by 6%. Overall, it was an exceptional quarter as it also produced an impressive beat of analysts’ organic revenue and EPS estimates.
The stock is up 4.4% since reporting and currently trades at $300.98.
Read our full, actionable report on Medpace here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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