INCR
INC Research Holdings Inc
Healthcare
09/12/2016
Presented
| Date | 09/08/2016 |
| Price | $43.38 |
| Market Cap | $2.43B |
| Ent Value | $2.52B |
| P/E Ratio | 21.48x |
| Book Value | $5.29 |
| Div Yield | 0% |
| Shares O/S | 56.08M |
| Ave Daily Vol | 895,754 |
| Short Int | 2.41% |
Current
| Price | $1.82 |
| Market Cap | $0.08B |
| INC Research Holdings, Inc. engages in clinical research on therapeutic alignment and expertise in Central Nervous System, oncology and other complex diseases. It operates through the following segments: Clinical Development Services, Phase I Services and Global Consulting. The Clinical Development Services segments offers a variety of select and stand-alone clinical development services such as clinical monitoring, investigator recruitment, patient recruitment, data management and study reports to assist customers with their drug development process. The Phase I Services segment focuses on clinical development services for Phase I trials that include scientific exploratory medicine, first-in-human studies through proof-of-concept stages and support for Phase I studies in established compounds. The Global Consulting segment provides consulting services regarding clinical trial regulatory affairs, regulatory consulting services, quality assurance audits and pharmacovigilance consulting, non-clinical consulting and medical writing consulting. The company was founded on August 13, 2010 and is headquartered in Raleigh, North Carolina. |
Publicly traded companies mentioned herein: Charles River Laboratories Intl Inc (CRL), IMS Health Holdings Inc (IMS), INC Research Holdings Inc (INCR), PAREXEL International Corporation (PRXL), Quintiles Transnational Holdings Inc (Q)
Highlights
The presenter is long shares of INC Research (INCR), a global contract research organization (CRO) that is focused primarily on Phase I through IV studies and is particularly focused on the later stages of development (II through IV). The presenter briefly provided an overview of the services and value-add CROs provide to pharma and biotech companies, and said the recent selloff in biotech has hit the CROs and pushed multiples lower creating an attractive buying opportunity. In his opinion, INCR should be able to grow ahead of the group and deserves to trade at a premium multiple to its peers, which are trading at ~12x EV/ EBITDA. INCR’s business mix is presently ~55% large pharma and ~45% biotech, and the company is focused on growing its large pharma exposure. Unlike its peers which have greater exposure to large pharma, INCR has meaningful room for growth, and can potentially grow 20% year-over-year in this segment as new compounds advance through development. Additionally, INCR’s backlog is up mid-teens (%) year-over-year and the presenter described how its recognition is conservative and conversion has trended well. “We don’t see them talking about cancellations”. Overall, he believes the stock should trade at a 15x multiple (versus 12x today with the stock at ~$43) and this implies a more fair value would be $60+.
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