Morningstar | Icon's 2Q Performance Largely Tracks Our Expectations
Icon's second-quarter results broadly tracked our expectations. Our forecasts remain within management's increased guidance range, and we do not anticipate a major change in our fair value estimate or our narrow moat rating. Management raised the lower end of its previously announced 2018 top-line guidance to $2,560 million (still below our $2,570 million forecast) and slightly raised its earnings per share forecast to $5.98-$6.12 (still encompassing our $6.01 forecast) from $5.91-$6.11. Icon's guidance uplift is supported by strong outsourcing trends and a buoyant funding environment, which we think is augmented by the company's operational discipline.Compared with the year-ago period, second-quarter revenue grew 2% organically after excluding impacts from the new revenue recognition standard, foreign exchange fluctuations, and M&A. We continue to assume mid-single-digit top-line growth over the 10-year forecast period of our model. Backlog after adjusting for the effect of the new revenue recognition standard grew 16% compared with the year-ago period, and we think the company will continue with its increased hiring pace in order to address the growth. Furthermore, Icon's book/bill (ex-ASC 606) of 1.27 times enhances the company's future sales growth trajectory. Separately, Icon reiterated its capital-allocation focus on M&A. We expect to hear more detailed strategic updates regarding potential M&A, robotic automation, and protocol digitalization during the company's analyst day Sept. 10.
Icon is engaged in providing outsourced development services to the pharmaceutical, biotechnology and medical device industries. Co. specializes in the strategic development, management and analysis of programs that support clinical development from compound selection to Phase I-IV clinical studies. Co.'s services, which are integral elements of the clinical development process, include clinical trials management, biometric activities, consulting, imaging, contract staffing, informatics and laboratory services. Co. in engaged in conducting clinical trials in most therapeutic areas on a global basis and has the operational flexibility to provide development services on a stand-alone basis.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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