Stock (Symbol) |
ICON (ICLR) |
Stock Price |
$72 |
Sector |
| Healthcare |
Data is as of |
| January 9, 2016 |
Expected to Report |
| Feb 22 – Mar 1 |
Company Description |
 ICON public limited company (ICON) is an Ireland-based contract research organization (CRO), providing outsourced development services to the pharmaceutical, biotechnology and medical device industries. The Company is engaged in the strategic development, management and analysis of programs that support the various stages of the clinical development process, from compound selection to Phase I-IV clinical studies. ICON’s services include clinical trials management, biometric activities, consulting, imaging, contract staffing, informatics and laboratory services. ICON also conducts various laboratory tests on the patient’s blood, urine and other bodily fluids at appropriate intervals during the trial. The Company’s information systems offerings include ICONIK, Firecrest, iDOC, iLearn, ADDPLAN, AptivAdvantage and AptivInsite. Source: Thomson Financial |
Sharek’s Take |
 ICON (ICLR) is a healthcare outsourcer that helps drug and biotech drug companies perform clinical trials and drug development. ICLR stock has been a winner, rising 20% a year for a decade, and now at $68 the stock sells for just 15x earnings. I owned ICLR for clients around a decade ago, and the stock got creamed when the company lowered revenue estimates, but at the time the stock sold for around 25x earnings and after the fall the P/E was 15. The P/E is 15 now. ICON generates a lot of cash and has acquired one company in each of the past nine years. It is expected to have 18% profit growth in 2016, 21% growth long-term, and has beaten the street the last 8 qtrs. I will purchase ICLR for the Growth Portfolio and Aggressive Growth Portfolio today. |
One Year Chart |
 Note these charts are as of January 9 and the stock market suffered a heavy selloff last week, pushing the stock down to $68. ICON grows profits more rapidly than sales. Last qtr the company had 29% profit growth on just 2% sales growth (4% on a constant dollar basis), and beat the street by a penny. ICON is based in Ireland, does 24% of business there and 40% in the U.S. |
Fair Value |
 Overall the company has growth profits from $0.43 in 2005 to possibly $4 in 2015. But there was an issue in 2011 due to a slack in clinical research. Then ICON signed up Pfizer as a customer and the ship sailed forward. My Fair Value is 20x earnings, which would be a gain of 38% from Friday’s close. |
Bottom Line |
 ICLR has had a rough ten years, but overall grew profits 25% a year as the stock rose 21%. There is risk that drug companies will pull back on clinical research, but the stock is down to 15x earnings and thus the risk is lower. I will purchase ICLR for the Growth Portfolio and Aggressive Growth Portfolio where it will rank 16th and 17th in each respective Power Rankings. |
Power Rankings |
Growth Stock Portfolio
17 of 38Aggressive Growth Portfolio 16 of 19Conservative Stock Portfolio N/A |
