Medpace (MEDP): Buy, Sell, or Hold Post Q3 Earnings?

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the drug development inputs & services industry, including Medpace and its peers.

Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.

The 8 drug development inputs & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.9%.

Thankfully, share prices of the companies have been resilient as they are up 9.2% on average since the latest earnings results.

Best Q3: Medpace

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Medpace reported revenues of $659.9 million, up 23.7% year on year. This print exceeded analysts’ expectations by 2.7%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ organic revenue estimates and a solid beat of analysts’ full-year EPS guidance estimates.

Medpace scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 13.4% since reporting and currently trades at $619.75.

We think Medpace is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

UFP Technologies

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

UFP Technologies reported revenues of $154.6 million, up 6.5% year on year, outperforming analysts’ expectations by 3.3%. The business had a very strong quarter with an impressive beat of analysts’ revenue and EPS estimates.

The market seems happy with the results as the stock is up 11.5% since reporting. It currently trades at $221.97.

Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free for active Edge members.

Slowest Q3: Azenta

Serving as the guardian of some of medicine's most valuable materials, Azenta provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Azenta reported revenues of $159.2 million, up 5.5% year on year, exceeding analysts’ expectations by 1.6%. Still, it was a slower quarter as it posted EPS in line with analysts’ estimates.

Interestingly, the stock is up 22.9% since the results and currently trades at $36.86.

Read our full analysis of Azenta’s results here.

IQVIA

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

IQVIA reported revenues of $4.1 billion, up 5.2% year on year. This print topped analysts’ expectations by 0.5%. However, it was a mixed quarter as it failed to impress in some other areas of the business.

IQVIA delivered the highest full-year guidance raise but had the weakest performance against analyst estimates among its peers. The stock is up 4.7% since reporting and currently trades at $227.60.

Read our full, actionable report on IQVIA here, it’s free for active Edge members.

West Pharmaceutical Services

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

West Pharmaceutical Services reported revenues of $804.6 million, up 7.7% year on year. This number beat analysts’ expectations by 2.1%. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

The stock is flat since reporting and currently trades at $274.44.

Read our full, actionable report on West Pharmaceutical Services here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after reports revealed the Trump administration considered extending the Affordable Care Act (ACA) subsidies. These subsidies, which are government financial aids to help people pay for health insurance, are crucial for insurers as they maintain a stable customer base. An extension would ensure continued revenue for companies with significant exposure to the ACA marketplace. The news prompted a strong positive reaction from investors, with Centene (CNC) shares jumping as much as 8%, Molina Healthcare (MOH) rising over 3%, and Oscar Health (OSCR) soaring 18%. The potential for a two-year extension reduces regulatory uncertainty for the sector, which investors view as a significant positive for the industry's outlook.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Senior Health, Home Health & Hospice company BrightSpring Health Services jumped 2.5%. Is now the time to buy BrightSpring Health Services? Access our full analysis report here, it’s free for active Edge members.
• Genomics & Sequencing company 10x Genomics jumped 8.2%. Is now the time to buy 10x Genomics? Access our full analysis report here, it’s free for active Edge members.
• Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho jumped 7.7%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free for active Edge members.
• Drug Development Inputs & Services company Medpace jumped 4.3%. Is now the time to buy Medpace? Access our full analysis report here, it’s free for active Edge members.
• Drug Development Inputs & Services company Fortrea jumped 8.4%. Is now the time to buy Fortrea? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Fortrea (FTRE)

Fortrea’s shares are extremely volatile and have had 70 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock gained 9.1% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

Fortrea is down 35.9% since the beginning of the year, and at $11.96 per share, it is trading 49.6% below its 52-week high of $23.73 from December 2024. Investors who bought $1,000 worth of Fortrea’s shares at the IPO in June 2023 would now be looking at an investment worth $397.34.

Looking back on drug development inputs & services stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Charles River Laboratories and its peers.

Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.

The 7 drug development inputs & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.1%.

In light of this news, share prices of the companies have held steady as they are up 2.3% on average since the latest earnings results.

Charles River Laboratories

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Charles River Laboratories reported revenues of $1.00 billion, flat year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a satisfactory quarter for the company with a narrow beat of analysts’ organic revenue estimates.

James C. Foster, Chair, President and Chief Executive Officer, said, “Our solid third-quarter financial results demonstrate that the demand for our extensive portfolio of early-stage research and manufacturing products and services remains stable. We believe that positive signals are beginning to emerge which indicate that the industry may be on a path towards recovery; however, sustained improvement in our business will take time. There is still some uncertainty in the healthcare sector, so we are remaining cautious at this time.”

Charles River Laboratories delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 5.9% since reporting and currently trades at $167.29.

Is now the time to buy Charles River Laboratories? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Medpace

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Medpace reported revenues of $659.9 million, up 23.7% year on year, outperforming analysts’ expectations by 2.7%. The business had an exceptional quarter with a solid beat of analysts’ organic revenue and full-year EPS guidance estimates.

Medpace pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 7.9% since reporting. It currently trades at $589.88.

Is now the time to buy Medpace? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: IQVIA

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

IQVIA reported revenues of $4.1 billion, up 5.2% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a mixed quarter because it struggled in other parts of the business.

IQVIA delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 1.5% since the results and currently trades at $220.59.

Read our full analysis of IQVIA’s results here.

Repligen

With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.

Repligen reported revenues of $188.8 million, up 21.9% year on year. This number beat analysts’ expectations by 3.8%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ revenue estimates.

The stock is down 5.4% since reporting and currently trades at $152.42.

Read our full, actionable report on Repligen here, it’s free for active Edge members.

Fortrea

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Fortrea reported revenues of $701.3 million, up 3.9% year on year. This print topped analysts’ expectations by 8.2%. It was a strong quarter as it also recorded an impressive beat of analysts’ revenue estimates and full-year revenue guidance exceeding analysts’ expectations.

Fortrea scored the biggest analyst estimates beat among its peers. The stock is up 7.2% since reporting and currently trades at $10.40.

Read our full, actionable report on Fortrea here, it’s free for active Edge members.

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the drug development inputs & services industry, including UFP Technologies and its peers.

Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.

The 7 drug development inputs & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.1%.

Thankfully, share prices of the companies have been resilient as they are up 7.1% on average since the latest earnings results.

UFP Technologies

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

UFP Technologies reported revenues of $154.6 million, up 6.5% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

“I am pleased with our third quarter results and continued progress with our strategic initiatives,” said R. Jeffrey Bailly, Chairman and CEO.

Interestingly, the stock is up 22.8% since reporting and currently trades at $245.

Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Medpace

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Medpace reported revenues of $659.9 million, up 23.7% year on year, outperforming analysts’ expectations by 2.7%. The business had an exceptional quarter with a solid beat of analysts’ organic revenue estimates and a solid beat of analysts’ full-year EPS guidance estimates.

Medpace scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 10.1% since reporting. It currently trades at $602.77.

Is now the time to buy Medpace? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: IQVIA

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

IQVIA reported revenues of $4.1 billion, up 5.2% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a mixed quarter because it struggled in other parts of the business.

IQVIA delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $218.81.

Read our full analysis of IQVIA’s results here.

West Pharmaceutical Services

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

West Pharmaceutical Services reported revenues of $804.6 million, up 7.7% year on year. This number beat analysts’ expectations by 2.1%. It was a very strong quarter as it also logged an impressive beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

The stock is flat since reporting and currently trades at $277.41.

Read our full, actionable report on West Pharmaceutical Services here, it’s free for active Edge members.

Fortrea

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Fortrea reported revenues of $701.3 million, up 3.9% year on year. This print surpassed analysts’ expectations by 8.2%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ revenue estimates and full-year revenue guidance exceeding analysts’ expectations.

Fortrea achieved the biggest analyst estimates beat among its peers. The stock is up 22.7% since reporting and currently trades at $11.90.

Read our full, actionable report on Fortrea here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.