Medpace Holdings and Iqvia Holdings stocks skyrocketed Tuesday after the clinical resource organizations kicked off a parade of strong second-quarter reports.
Shares of Medpace soared 54.7%, closing at 477.73, while Iqvia stock ramped up 17.9% to 187.37.
Both companies help medical companies run the clinical studies they need to win approval for new drugs and devices. Medpace's report was "shockingly strong" despite "market turbulence," Leerink Partners analyst Michael Cherny said in a report. That turbulence includes cuts to National Institutes of Health grants which many companies and researchers use to foot the bill for clinical testing.
"Parsing together the moving pieces here, given what has been a very tough biotech macro backdrop, will be important on tomorrow's call," Cherny said in a late Monday report. "On the surface a stock move of this magnitude seems like a lot, but the overall report here certainly deserves a ton of credit (and, again, comes in the face of what was expected to be broader pressures)."
Iqvia's report was less bullish but, still, there were "more pluses than minuses," Cherny said in a separate report.
Medpace Stock: Big Beat, But Questions Remain
Medpace's report included a big revenue beat, big bookings, big guidance uptick and a big after-hours stock move, Cherny said.
The company came in with $603.3 million in sales, walloping forecasts for $538.8 million and growing more than 14%. Medpace earned $3.10 per share, up almost 13% and above calls for $2.98, according to FactSet.
William Blair analyst Max Smock noted that for the first time in five quarters net new business awards beat expectations at $621 million vs. his call for $518 million. That led to a higher book-to-bill ratio of 1.03 times, topping projections for 0.95.
Smock kept his market perform rating on Medpace stock, though.
"We are admittedly struggling to reconcile how net bookings improved nearly 25.0% quarter-over-quarter despite the drop-off in funding observed both year-to-date and sequentially in the second quarter, with our industry conversations pointing to a small biotech demand environment that was relatively unchanged from earlier this year," he said.
Medpace also raised its sales outlook for the year to $2.42 billion to $2.52 billion. That's also hard to swallow, Smock said, noting it implies sales in the second half of the year will grow 22.3% year over year and 12.6% sequentially.
Iqvia Stock: Not A 'Uniformly Clean Quarter'
Iqvia ticked its guidance up to $16.1 billion to $16.3 billion in sales this year. The company also hiked its earnings outlook to $11.75 to $12.05 per share.
But it wasn't a "uniformly clean quarter," Leerink's Cherny said. The updated outlook includes a $100 million step-down in Covid-tied sales, a 100 basis-point hit from exchange rates and a 150 basis-point impact from acquisitions.
Total sales came in at $4.02 billion, beating expectations for $3.96 billion, according to FactSet. The strong topline came on the back of strong currency winds, William Blair's Smock said in a another note. Adjusted earnings also topped forecasts at $2.81 per share vs. calls for $2.77.
Smock also noted the book-to-bill ratio came in ahead of forecasts at 1.12 times. Analysts expected a lower 1.10.
"Management's commentary on the health of the clinical demand environment was encouraging noting that forward-looking demand indicators improved, with RFP (requests for proposal) flow growing high single digits sequentially and low teens year-over-year," he said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
