Stock (Symbol) |
ICON (ICLR) |
Stock Price |
$78 |
Sector |
| Healthcare |
Data is as of |
| September 14, 2015 |
Expected to Report |
| Oct 20 – Oct 26 |
Company Description |
 ICON is a Global Contract Research Organisation (CRO). We specialise in the strategic development, management and analysis of programs that support Clinical Development; from compound selection to Phase I-IV clinical studies. Source: Company Website |
Sharek’s Take |
 ICON (ICLR) is a healthcare outsourcer that helps drug and biotech drug companies perform clinical trials and development. ICLR stock has been a winner, rising 20% a year for a decade now. And at 20x earnings the stock is a good value — with upside of more than 30% to my 2016 Fair Value. But there could be headwinds ahead as legislators are trying to crack down on high drug prices. If the drug companies have to reduce expenses, they could start here. Additionally, there have been sold earnings warnings within the Healthcare sector the past month or so — hospitals and staffing in particular. These issues have taken steam out of the sector, and increased the investment risk as the stocks get hit after lowering guidance. I was about to purchase ICLR when this news came out, and am glad I didn’t as the stock is $69 today. Lots of ETF investing nowadays, and even if ICLR is doing well the stock could fall when money comes out of the sector. I owned ICLR for clients around a decade ago, and the stock got creamed when the company lowered revenue estimates. That plus the fact I’m heavy on healthcare already are the reasons why I’m not in the stock now. Still, I feel this is a perennial 20% grower, a quality investment in growth accounts. |
One Year Chart |
 ICON has really been knocking the ball out of the park this year. It’s crushed earnings estimates by 9 cents, 11 cents, 8 cents and most recently 6 cents. Estimates for the next 4 qtrs show 28%, 24%, 22% and 19% profit growth coming. If the company continues to beat it could be pumping out 30% profit growth or greater. |
Fair Value |
 Wow, notice the 2011 fiscal year when profits fell to $0.31 a share. I think that’s crazy. 2011 was a good year for the economy. Also, the stock had a higher P/E in the mid 20s back in 2005-2008, so I don’t think we will see a big drop like we did before.
My Fair Value on ICLR is $78 (this table is from 9/14). The stock’s $68 today, and has good upside. |
Bottom Line |
 Here in the ten-year chart you can very clearly see the drop the stock took in late 2008. I sold and took the loss, which was the right move as it took over five years for the comeback to be completed.
ICLR is a quality company but I’m already overweight Healthcare and there could be headwinds coming and I wish to remain on the sidelines until I see if a storm is ahead. I’ll continue to keep ICLR on the radar. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
