We recently published a list of 12 High Growth Large Cap Stocks to Buy Now. In this article, we are going to take a look at where ICON Public Limited Company (NASDAQ:ICLR) stands against other high growth large cap stocks.
BlackRock highlighted that its portfolio managers are broadly optimistic about US equities. Its portfolio managers opine that there is still some expected upside potential, despite the steep US stock valuations. However, the contrast between lagging European economic growth, and stock performance, is stark. The US Fed decided to reduce the policy rate by another 25 bps in a recent meeting as the apex bank sees inflation moving closer to its target of 2%.
However, the financial conditions remain loose after a historically sharp tightening cycle. The firm believes that such an unusual backdrop strengthens its view that the environment is being dominated by structural forces and not by a typical business cycle.
Overall, the firm remains overweight on the US given the positive view on the AI theme. The valuations for AI beneficiaries have strong backing as technology companies continue to beat high earnings projections. The asset manager believes that falling inflation continues to ease pressure on corporate profit margins.
High-Single Digit Growth in S&P 500
Goldman Sachs Research’s projections for the S&P 500 Index of stocks remain broadly the same as it was before Trump’s win. As per David Kostin, the chief US equity strategist at the firm, the S&P 500 is expected to reach 6,300 in the upcoming 12 months. The researchers expect growth in EPS of 11% in 2025 and 7% in the following year. That being said, David Kostin highlighted that the estimates might change as and when the new administration’s policy agenda gets revealed. Overall, strong earnings growth is expected to fuel continued equity market appreciation into next year.
Historically, the S&P 500 index generated a median return of 4% between election day in November and calendar year-end, as per Goldman Sachs. Together with the resilience in broader economic growth data and the expectation for further rate cuts, the near-term outlook for US equities remains healthy, as per Kostin.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
US Tariffs’ Impact
Several investors remain focused on trade policy, and Mr. Trump might have plans to implement some of the tariffs without legislation. Goldman Sachs believes that Trump will impose tariffs on imports from China. These are expected to average an additional 20 percentage points. Furthermore, European companies can face tariffs. The large investment bank also highlighted that, during Trump’s previous administration, domestic-facing and defensive industries, including utilities, telecom services, and real estate, outperformed. On the other hand, the stocks of automobiles, capital goods, and technology hardware underperformed.
The company believes that M&As might increase under Trump’s presidency. Though the policy uncertainty will take time to recede, there are expectations that antitrust regulation will be more relaxed. Moreover, the continued economic expansion and higher confidence among CEOs might result in increased corporate combinations. Approximately, $4 trillion of corporate spending in the next calendar year might roughly get evenly split between returning cash to shareholders and growth investments (such as CapEx, R&D, and M&A).
A senior executive looking up at a large boardroom filled with the stocks their company manages.
Our Methodology
To list the 12 High Growth Large Cap Stocks to Buy Now, we sifted through several online rankings and a screener. We extracted the stocks that have a healthy 5-year revenue growth and a market cap of more than $10 billion. Finally, the stocks were ranked in ascending order of upside potential, as of 12th November.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
ICON Public Limited Company (NASDAQ:ICLR)
5-Year Revenue Growth: ~24.6%
Average Upside Potential: ~34.0%
Market cap as of 12 November: $17.4 billion
ICON Public Limited Company (NASDAQ:ICLR) is a clinical research organization, that offers outsourced development and commercialization services in Ireland, the Rest of Europe, the US, and internationally.
Wall Street experts are optimistic about the company’s acquisition of PRA Health Sciences. This acquisition has expanded ICON Public Limited Company (NASDAQ:ICLR)’s market share and capabilities, mainly in late-stage clinical research. This strategic move places the company to compete more effectively with other top-tier CROs and potentially tap a larger share of the growing outsourced R&D market. The acquisition should result in expanded service offerings, cost synergies, enhanced technological capabilities, and improved bargaining power.
The analysts believe that ICON Public Limited Company (NASDAQ:ICLR) might benefit from potential lower interest rates, which can result in significant investment in the biotech sector and increase demand for CRO services. Also, the company might benefit from a continued trend toward increased outsourcing penetration in the pharmaceutical industry. Moving forward, the company continues to focus on strategic partnerships and M&A, mainly in lab services and the Asia Pacific region.
ICON Public Limited Company (NASDAQ:ICLR)’s net business wins in Q3 2024 came in at $2,328 million. This reflects a net book to bill in the quarter of 1.15, and a trailing twelve-month net book to bill of 1.21. The company’s full-year 2024 financial revenue guidance stood at $8,260 million – $8,300 million, which implies a YoY rise of 1.7% – 2.2%. It expects adjusted EPS of between $13.90 – $14.10, reflecting a YoY growth of 8.7% – 10.2%.
As per Wall Street analysts, the shares of ICON Public Limited Company (NASDAQ:ICLR) have an average price target of $280.50. Baron Funds, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“Solid stock selection in life sciences tools & services was mainly due to double-digit gains from clinical genetic testing company Natera, Inc. and global contract research organization ICON Public Limited Company (NASDAQ:ICLR). ICON’s shares rose in response to management’s optimistic messaging in the face of a firming industry backdrop and accelerating trends, which led investors to believe that the company’s initial guidance for fiscal year 2024 was more conservative than initially believed. The company continues to experience strong demand despite lingering concerns over biotechnology funding levels. Customer preference is shifting toward functional outsourcing services, which should disproportionally benefit ICON as the leader in this market.”
Overall, ICLR ranks 7th on our list of 12 High Growth Large Cap Stocks to Buy Now. While we acknowledge the potential of ICLR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ICLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.