Narrow-Moat IQVIA Reports Solid Year-End Results; Maintaining FVE

Narrow-Moat IQVIA reported solid fourth-quarter results highlighted by revenue of over $3.7 billion and total 2022 revenue of $14.4 billion, growing nearly 4% versus the prior year. IQVIA’s technology and analytics, and research and development solutions businesses have continued to report healthy growth. We maintain our fair value estimate of $268 per share and it’s currently trading in 4-star territory about 15% below our fair value estimate.

IQVIA seems to have avoided the “COVID cliff” feared by some investors, which would have resulted in significant revenue declines from a lack of COVID-related work. COVID-related revenue totaled about $1 billion for the year, which represents less than 7% of overall 2022 revenue—down from nearly 13% of revenue in 2021. Excluding all COVID-related work, organic growth at constant currency was 13% in 2022.

IQVIA’s research and development solutions achieved bookings of $10.8 billion, which was its highest ever. The company’s backlog stands at a record $27.2 billion, and the business added over 275 new customers in the year. We continue to have a positive outlook for IQVIA as we anticipate outsourcing from biotech and pharma companies will further drive growth for large contract research organizations. We forecast mid-single-digit revenue growth in 2023.

IQVIA’s strong customer demand supports its narrow economic moat rating, which is based on its intangible assets and high switching costs associated with running late-stage clinical trials. A high barrier to entry is also created by the scale of IQVIA’s data and best-in-class analytical technology, which we believe allows the company to be well-positioned to continue carrying out next-generation decentralized trials. We also appreciate IQVIA’s diversified customer base, which strengthens its competitive advantages.