Morgan Stanley Downgrades IQVIA Holdings (IQV) to Equalweight
Morgan Stanley analyst Kallum Titchmarsh downgraded IQVIA Holdings (NYSE: IQV) from Overweight to Equalweight with a price target of $200.00 (from $225.00).
The analyst comments "IQV - Moving to Equal-weight w/ $200 PT: Scanning through Street numbers, we struggle to identify clear drivers of upside for IQV relative to the CRL setup. Longerterm, we're also somewhat skeptical on margin expansion from today's levels, with our survey work continuing to imply sponsor appetite to increase Functional Service Provider (FSP) mix relative to Full-Service Outsourcing (FSO), while a more tangible benefit from AI cost savings is challenging to quantify at present (particularly given potential for pricing compression). Our checks over recent months suggest ongoing work by established pharma companies to begin insourcing elements of clinical trial workflows, including data analysis, statistical work, and medical writing, though nearer-term risk to numbers from this is limited in our view (we've highlighted instances of pharma pointing to reduced clinical CRO reliance within this report). We certainly place value on the data that IQV has generated through its duration in the market and expect its value to increase in an AI world, but we aren't quite sure how this will be monetized beyond its current means. We understand the multiple is close to 10yr lows and the company has a consistent track record of EPS expansion, though the bulk of EPS growth since 2022 has stemmed from buybacks (versus generating meaningful leverage on a MSD organic CAGR). To the point on the current multiple and investor positioning, there's certainly a chance the stock moves up on a clean Q2 (similar to what we called out for Q1), but for durable multiple expansion we need to get more comfortable with the AI overhang on the story so prefer to move onto the sidelines for now. We lower our PT to $200, implying a 12x 2026 EV/EBITDA multiple (from 13x prior)."
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Shares of IQVIA Holdings closed at $179.17 yesterday.