IQV – Market expectations are for Uniform ROA to recover, and management may have concerns about demand, growth, pricing, and free cash flow

December 2, 2021

  • IQVIA Holdings Inc. (IQV) currently trades above corporate and historical averages relative to Uniform earnings, with a 28.2x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to recover to 62%, accompanied by 12% Uniform asset growth.
  • Similarly, analysts expect Uniform ROA to improve to 58% by 2022, accompanied by 24% Uniform asset growth.
  • If sustained going forward, these levels would imply a stock price closer to $414, representing significant potential equity upside for the firm.
  • That said, the firm’s projected asset growth is largely driven by acquisitions, indicating that this level of growth is likely unsustainable in the long run.
  • Moreover, the firm’s most recent earnings call suggests management may have concerns about demand, growth, pricing, and free cash flow.

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