Partnerships make ICON plc. ($ICLR) strong

Investment idea by DTI

Exchange: NASDAQ

Sector: Healthcare

Industry: Medical Laboratories & Research

Entry strategy

Price: 138,37

Stop-loss: 117,56

Take profit: first target 148,50, then 171,50

Investment horizon: 6 months

Company details

ICON plc. is an international research organization. It specialization is the perform of research contracts (CRO). The company provides external services for the development of pharmaceutical and biotechnological industries. Its services include clinical trial management, biometric activity, consulting, visualization, staffing, informatics and laboratory services.

The company’s revenue is growing at a faster rate than the companies’ in the healthcare sector — in the last year revenue increased by 14.65%. The growth rate of earnings per share (EPS) is higher than that of similar companies and amounted to 12.25% YoY.

Financial summary of ICON plc. performance is presented in Table 1:

Open original — Table 1. Financial results of ICON plc. ($ICLR). Source: MarketWatch
Open original — Table 2. Financial results of ICON plc. ($ICLR) for 2017 and Q1 2018. Source: MarketWatch

The company is more stable than its competitors from the industry — its coefficient of interest coverage is 29.25. The return on assets (ROA) and equity (ROE) is also higher than that of other firms. On average for 5 years the indicators were 13.03% and 23.49% respectively. The return on investment (ROI) over the past 5 years has been consistently higher than that of similar companies.

It is worth noting that the main multiples of cost — P / E and P / S — of the company show that the market estimates it much cheaper than similar companies in its industry.

The company conducts joint projects with other well-known firms. For example, on April 17, 2018 ICON plc. started the Intel Pharma Analytics project together with Intel Corporation, and on May 14, 2018 the company gained access to the research infrastructure of DuPage Medical Group. We expect that these projects will also contribute to the growth of the company’s cash flow and to the growth of quotation of its shares.

Technical analysis (trading plan)

Open original — Pic. 1. Technical analysis for ICON plc. ($ICLR). Source: TradingView

Also published on Medium.