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Icon PLC (ICLR) Up 6.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Icon PLC (ICLR). Shares have added about 6.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Icon PLC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ICON Q1 Earnings Surpass Estimates, Margins Expand

ICON delivered first-quarter 2024 adjusted earnings per share of $3.47, an increase of 19.7% from the year-ago period’s figure. The metric surpassed the Zacks Consensus Estimate by 0.9%.

Revenues

Total revenues in the first quarter rose 5.7% year over year to $2.09 billion. The metric surpassed the Zacks Consensus Estimate by 0.08%.

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Gross business wins in the first quarter were $3.11 billion and cancellations were $460 million. This resulted in net business wins of $2.65 billion and a book-to-bill of 1.27.

Margins

The gross profit in the first quarter increased 6.2% year over year to $6.19 billion. The gross margin expanded 15-basis points (bps) year over year to 29.6%.

During the quarter, Selling, general and administrative expenses fell 11.3%.

The adjusted operating income in the quarter under review was $4.42 billion, increasing 15.3%. The adjusted operating margin expanded 177 bps to 21.1%.

Cash Position

ICON exited first-quarter 2024 with cash and cash equivalents of $396.1 million compared with $378.1 million at the end of fourth-quarter 2023. The company ended the first quarter with no debt on its balance sheet.

Cumulative cash flow provided by operating activities at the end of first quarter 2024 was $327.1 million compared to $175.5 million in the prior year’s comparable period.

Guidance

The company updated its full-year 2024 financial guidance:

Full-year 2024 revenues are now expected in the range of $8.48-$8.72 billion, suggesting growth of 4.4-7.4%. The Zacks Consensus Estimate for the same is pegged at $8.61 billion.

Full-year 2024 adjusted earnings per share are expected to be in the range of $14.65-$15.15, calling for growth of 14.5-18.5%. The Zacks Consensus Estimate for the same is pegged at $14.96.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Icon PLC has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Icon PLC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Icon PLC is part of the Zacks Medical Services industry. Over the past month, Elevance Health (ELV), a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended March 2024 more than a month ago.

Elevance Health reported revenues of $42.27 billion in the last reported quarter, representing a year-over-year change of +0.9%. EPS of $10.64 for the same period compares with $9.46 a year ago.

Elevance Health is expected to post earnings of $10.02 per share for the current quarter, representing a year-over-year change of +10.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.

Elevance Health has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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