Medidata Solutions (MDSO) Set To Join The S&P 400 Index

Medidata Solutions Inc. (NASDAQ:MDSO) , a leading global provider of clinical development solutions, is scheduled to join the coveted S&P 400 benchmark before the opening bell on Jun 26. The company is currently part of the S&P SmallCap 600 Index. The stock carries a Zacks Rank #3 (Hold).

Notably, Medidata Solutions will be replacing PrivateBancorp Inc. (PVTB) in the S&P MidCap 400 Index as the latter is set to be acquired by Canadian Imperial Bank of Commerce. Medidata Solutions will be added to the S&P MidCap 400 Global Industry Classification Standard (GICS) Health Care Technology Sub-Industry Index.

With a portfolio of 400 leading companies that have approximately 80% coverage of the available market capitalization, the S&P Index is an important metric for U.S. equities. It is no wonder that the index is considered one of the best single gauges for large-cap U.S. equities. To be included in the index, a stock must have a total market capitalization of $1.4 billion to $5.9 billion. It will therefore act a big boost for investors holding shares of Medidata Solutions.

Key Developments

Medidata Solutions has been gaining prominence of late, courtesy of its broad-based product portfolio which includes Medidata Rave, Medidata Coder, Image Management, Risk-Based Monitoring, Medidata CTMS and Medidata Patient Cloud.

We are upbeat about the company’s solid investment strategy undertaken to improve the R&D activities. Medidata Solutions not only invests organically in product development but has also taken solid initiatives to leverage on M&A activities to accelerate delivery of its innovative technologies. This has created significant shareholder value for the company. Following the recent acquisition of CHITA, Medidata Solutions announced the availability of its regulated content management platform, Medidata RCM.

Of the other major developments, the enterprise deal with Teva is worth a mention. Teva selected the Medidata Clinical Cloud to empower the next generation of its Phase 2 and Phase 3 specialty medicine trials.

Earlier this year, Medidata Solutions announced the receipt of the ‘Clinical Partnership of the Year’ award at the second annual Clinical and Research Excellence (CARE) Awards, courtesy of its ‘unique technology collaboration’ with TESARO.

Notably, TESARO has been working closely with Medidata Solutions since 2013, especially on features like the Medidata Balance – a platform that enhances the clinical trial supply management of Medidata Solutions. Medidata Balance is a fully configurable randomization and trial supply management (RTSM) solution that leverages on the company’s flagship Medidata Rave platform.

Furthermore, Medidata Solutions’ solid international foothold is a significant positive. In the last reported quarter, the company saw a solid increase in subscription bookings in the Asia-Pacific market, almost 12 times on a year-over-year basis. In this regard, Korea-based global biopharmaceutical company Medytox, recently announced plans to expand its use of the Medidata Clinical Cloud for domestic and global clinical trials.

The EMEA market also saw a strong significant year-over-year growth in bookings in the last quarter. Medidata Solution’s decision of opening a data center in EU is also a key positive.

Stock Price & Estimate Revision Trend

Medidata Solutions has had an impressive run on the bourse over the last one year. The company has gained roughly 66.4%, substantially higher than the Zacks categorized Medical Info Systemssub-industry’s addition of almost 7.6%. Moreover, the current level compares favorably with the S&P 500’s return of 16.9% over the same time frame. This, together with a long-term expected earnings growth rate of 21.1%, instills confidence in investors.

Furthermore, the estimate revision for the stock has been favorable. The year has seen four estimates move north over the last two months, compared with no movement in the opposite direction. As a result, full-year earnings estimates rose 8% to 81 cents per share over the same time frame.

Stocks to Consider

Some better-ranked stocks in the broader medical sector include Inogen Inc. (NASDAQ:INGN) , Luminex Corporation (NASDAQ:LMNX) and IDEXX Laboratories, Inc. (NASDAQ:IDXX) . Notably, Inogen and Luminex Laboratories sport a Zacks Rank #1 (Strong Buy), while IDEXX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 110.4%.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock posted a positive earnings surprise of 237.5% in the last reported quarter.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.37%. Additionally, the stock represents an impressive one-year return of 84.4%.

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