Market Capitalization $6.3 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUY SDAQ: ICLR BUY RATING SINCE 03/26/2013 TARGET PRICE $ ICLR BUSINESS DESCRIPTION ICON Public Limited Company, a contract research organization, provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries in Ireland, rest of Europe, the United States, and internationally. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS Sector: Health Care Sub-Industry: Life Sciences Tools & Services Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY TARGET PRICE $ RETURN ON EQUITY (%) ICLR Ind Avg S&P 500 Q Q Q P/E COMPARISON Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History RECOMMENDATION We rate (ICLR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity ICLR EPS ALYSIS¹ ($) Ind Avg S&P 500 HIGHLIGHTS Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.11% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ICLR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year. Q Q Q Q Q Q Q = not available NM = not meaningful Q Q Q Q Compustat fiscal year convention is used for all fundamental data items. has improved earnings per share by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, increased its bottom line by earning $4.66 versus $3.98 in the prior year. This year, the market expects an improvement in earnings ($5.37 versus $4.66). The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Life Sciences Tools & Services industry average. The net income increased by 16.1% when compared to the same quarter one year prior, going from $63.88 million to $74.15 million. Despite its growing revenue, the company underperformed as compared with the industry average of 11.4%. Since the same quarter one year prior, revenues slightly increased by 4.8%. Growth in the company's revenue appears to have helped boost the earnings per share. The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, ICLR has a quick ratio of 1.82, which demonstrates the ability of the company to cover short-term liquidity needs. PAGE 1

2 SDAQ: ICLR PEER GROUP ALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) 2% 18% PRAH UNFAVORABLE BRKR VWR 10% BIO.B BIO EBITDA Margin (TTM) CRL PKI ICLR FAVORABLE WAT TECH QGEN 40% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $4.4 Billion and $15.9 Billion. Companies with or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) 2% 18% UNFAVORABLE BIO.B 0% QGEN Earnings Yield (TTM) TECH PRAH FAVORABLE CRL WAT ICLR BRKR VWR PKI 4.5% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between 2.1% and 17.7%. Companies with or NM values do not appear. INDUSTRY ALYSIS The life sciences tools and services (LSTS) industry is comprised of biotechnology companies and health care services, supplies, and equipment companies. The industry also includes firms that provide analytical tools, instruments, consumables and supplies, clinical trial services, contract research services, and technology solutions. The industry is complex and categorized into eight segments: genomics, proteomics, cell biology, combinatorial chemistry, small-animal in vivo analysis, bioinformatics, and general labware. Major LSTS players are Thermo Fisher Scientific (TMO), Agilent Technologies (A), Waters (WAT), and Illumina (ILMN). The industry has been historically fragmented, but recently, companies seeking expanded R&D capabilities or economies of scale have sought consolidation and collaboration. Genomics research progressed in the late 1990s and the early 2000s saw the emergence of proteomics. Currently, research and development is directed towards cell biology and animal in vivo research, which help to develop safer drugs by providing improved late-stage screening. More than 20% of the US population will be 65 years or older by 2050, implying increased demand for heart disease, diabetes, and cancer drugs. This scenario prompts LSTS companies to develop new therapies as well as new enzymes, chemical sensors, diagnostics and nanotechnology. The discovery of substitute drugs and stringent Food and Drug Administration (FDA) regulations are entrenched problems. Failure to meet FDA regulations leads to delays in product approval, penalties, plant closures, and loss of revenue. After the enactment of the Food and Drug Administration Modernization Act of 1997, the FDA tightened the approval procedure. Despite rising costs and shrinking margins, industry outlook remains positive due to technology advances, robust product pipeline, and sophisticated research. As the US baby boomer population ages, healthcare spending is projected to keep growing. PEER GROUP: Life Sciences Tools & Services Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) ICLR , , PKI PERKINELMER INC , , BIO BIO-RAD LABORATORIES INC , , BIO.B BIO-RAD LABORATORIES INC , , QGEN QIAGEN NV , , BRKR BRUKER CORP , , PRAH PRA HEALTH SCIENCES INC , , TECH BIO-TECHNE CORP , CRL CHARLES RIVER LABS INTL INC , , VWR VWR CORP , , WAT WATERS CORP , , The peer group comparison is based on Major Life Sciences Tools & Services companies of comparable size. PAGE 2

3 SDAQ: ICLR Annual Dividend Rate COMPANY DESCRIPTION ICON Public Limited Company, a contract research organization, provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries in Ireland, rest of Europe, the United States, and internationally. The company specializes in the strategic development, management, and analysis of programs that support various stages of the clinical development process from compound selection to Phase I-IV clinical studies. Its clinical development services comprise product development planning, strategic consulting, study protocol preparation, clinical pharmacology, pharmacokinetic and pharmacodynamic analysis, clinical research center, investigator site, patient recruitment, study monitoring and data collection, case report form preparation, statistical analysis, patient safety and risk-based monitoring, clinical data management, strategic analysis and data operation, regulatory consulting, and medical reporting and pharmacovigilance services. The company's clinical development services also comprise interactive response technologies, electronic endpoint adjudication, medical imaging, adaptive trial design and execution, medical device and biosimilar trial, functional, strategic resourcing, sample analyses, safety testing, microbiology, custom flow cytometry, biomarker development, bioanalysis, immunoassay development, patient registries, outcomes research, health economics, market access and commercialization, drug price consulting, and healthcare and scientific communication services, as well as research trials for US government agencies, electronic transmission of test results, and electronic patient reported outcomes. ICON Public Limited Company was founded in 1990 and is headquartered in Dublin, Ireland. South County Business Park Dublin 18 IRL Phone: Fax: Employees: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of ICLR shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 5.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, ICLR has a growth score better than 90% of the stocks we rate. Total Return 4.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 70% of the companies we cover. Efficiency 5.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 90% of the companies we review. Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 0.5 out of 5 stars Measures dividend yield and payouts to shareholders. This company pays no dividends. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 SDAQ: ICLR Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINCIAL ALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. has liquidity. Currently, the Quick Ratio is 1.82 which shows the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year Q4 FY E 2017(E) 5.96 E 2018(E) During the same period, stockholders' equity ("net worth") has increased by 13.68% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) EBITDA ($mil) EBIT ($mil) Net Income ($mil) STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) 2, , Total Debt ($mil) Equity ($mil) 1, PROFITABILITY Gross Profit Margin 41.03% 42.11% EBITDA Margin 22.98% 22.78% Operating Margin 19.29% 19.32% Sales Turnover Return on Assets 13.86% 13.22% Return on Equity 25.24% 25.34% DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % Avg Daily Volume 307, ,942 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 SDAQ: ICLR RATINGS HISTORY Our rating for has not changed since 3/26/2013. As of 11/16/2017, the stock was trading at a price of which is 7.1% below its 52-week high of $ and 56.8% above its 52-week low of $ Year Chart BUY: $ $125 $100 $75 MOST RECENT RATINGS CHANGES Date Price Action From To 11/16/15 $66.30 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/16/2017) 43.95% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. The current P/E ratio indicates a significant discount compared to an average of for the Life Sciences Tools & Services industry and a discount compared to the S&P 500 average of For additional comparison, its price-to-book ratio of 5.56 indicates a significant premium versus the S&P 500 average of 3.16 and a discount versus the industry average of The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings ICLR Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. Price/Projected Earnings ICLR Peers Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. Price/Book ICLR 5.56 Peers 6.39 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. ICLR is trading at a discount to its peers. Price/Sales ICLR 3.60 Peers 9.00 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. ICLR is trading at a significant discount to its industry on this measurement. DISCLAIMER: Price/CashFlow ICLR Peers Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth ICLR 1.45 Peers 0.92 Premium. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. ICLR trades at a significant premium to its peers. Earnings Growth lower higher ICLR Peers 7.68 Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. ICLR is expected to have an earnings growth rate that significantly exceeds its peers. Sales Growth lower higher ICLR 6.34 Peers Lower. A sales growth rate that trails the industry implies that a company is losing market share. ICLR significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5