Quintiles Hits A New 52-Week High: What's Driving The Stock?

Share price of Quintiles Transnational Holdings Inc. (NYSE:Q) , the world’s largest provider of product development and integrated healthcare services, rallied to a new 52-week high of $81.45 on Oct 5, eventually closing a bit lower at $80.54.

This represents an impressive one-year return of approximately 18.8%, better than the S&P 500’s 8.2% over the same period. In fact, since the last earnings release of second-quarter fiscal 2016 on Jul 27, the company’s share price has gained 7.3% till yesterday’s close.

Currently, Quintiles carries a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $9.38 billion.

Key Catalysts

We believe inorganic expansion has acted as a major catalyst for the company. The merger with IMS Health Holdings is also a key positive in our view. Per the agreement, each share of IMS Health was converted into 0.3840 of a Quintiles share. The acquisition was valued at $9 billion and is expected to create a ‘leading global integrated information and technology-enabled healthcare service provider’, strengthening Quintiles’ market position.

The strategic alliance with DaVita Clinical Research, a wholly owned subsidiary of DaVita HealthCare, is also a notable development. From this transaction, Quintiles is expected to gain nephrology expertise and enhance its global delivery capabilities, which will help it fortify its position in the field of clinical research. Notably, the company has 30 years of experience in the field of clinical trial research, especially in therapeutics.

The launch of Continuous Glucose Monitoring service is also a major growth driver for Quintiles. Notably, the solution offers innovative and wearable technology for diabetes-focused clinical trials, which is highly exclusive in the market. In this regard, a report by Markets and Markets forecasts that the global market for glucose, dextrose and maltodextrin is projected to reach a worth of $42.20 billion by 2021 at a CAGR of 6.7%, which holds considerable promise.

The company is also highly positive on the backdrop of its product development strategies, which are considered ‘the crown jewel of Quintiles’ by management. The company received 14 NME approvals from the FDA in the first half of 2016, which again is noteworthy.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2016 increased by a penny, forecasting earnings of $3.82, as one analyst upgraded estimates in the last 30 days.

Key Picks

Better-ranked stocks in the broader medical sector include Halyard Health Inc. (NYSE:HYH) , Straumann Holding AG SAUHF and ABIOMED Inc. (NASDAQ:ABMD) . Notably, Halyard carries a Zacks Rank #3 while Straumann and ABIOMED sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Halyard Health posted positive earnings surprises in the last four quarters, the average being 25.8%. Meanwhile, a glimpse at the share price reveals an impressive one-year return of 14.2%.

Straumann has an impressive long-term expected earnings growth rate of 13%. The Zacks Consensus Estimate rose by a massive 83 cents in the current year, reaching $12.09 per share.

ABIOMED posted positive earnings surprises in the last four quarters, the average being 34.9%. This stock has an impressive long-term expected earnings growth rate of 26.7%.

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