Pharma’s ‘information arms dealer’ is up nearly 80% from an April low. Josh Brown sees more gains
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — On Thursdays, we use this column to highlight a single name. Sometimes it’s Nvidia, sometimes it’s a stock you’ve never heard of before. I guarantee this will be a new one for most of you. Iqvia Holdings (IQV) is the healthcare services company drugmakers hire to run their clinical trials and to track how their drugs sell. Think of them as an information arms dealer to the entire pharma and biotechnology industry. The name is a history lesson. It began in 1954 as Intercontinental Marketing Statistics, which became IMS Health, a collector of prescription data. In 1982, Dennis Gillings founded Quintiles in North Carolina to run clinical trials for drugmakers. The two merged in October of 2016 as QuintilesIMS, and in November 2017 the company renamed itself Iqvia, with the ticker changing from Q to IQV. The I is for IMS, the Q is for Quintiles, and VIA means by way of. Earlier this year, the stock got caught in the AI-disruption sell-off, with the market worried that AI would shrink the need for hired research firms. It bottomed in late April and is now up 79% off that low. The market is deciding whether AI is a threat or a tailwind for this business, and Sean makes the tailwind case below. Iqvia reports Q3 before the open on Tuesday, Oct. 27, so the timing matters. Sean has the fundamentals below. I’ll be back with the technicals and where we’d be wrong. Best Stock Spotlight: Iqvia Holdings, Inc. (IQV) Sean — Iqvia is the company drugmakers hire to run their clinical trials and to tell them how their drugs are selling, as Josh noted (and in full transparency, I was not aware of this business!). IQV has a research side, R & D Solutions, which is a contract research organization. When a pharma or biotech company wants to test a new drug, Iqvia finds the sites, recruits the patients, runs the trial and cleans the data. Its Commercial Solutions segment then sells the data and analytics built on its operations, and oh by the way, they have one of the largest private healthcare datasets in the world (prescriptions, patient records and more). AI could really help this company. Both businesses within Iqvia are about finding patterns in messy data and speeding up workflows. Management says it has 294 AI agents deployed across 90 use cases, that 19 of the top 20 pharma companies use its AI tools, and that four of the top 10 are co-developing AI with it. In September, Iqvia launched Predictive Clinical Development, which it says delivers 50% faster data cleaning than its own historical performance. The CEO also said some large pharma clients expect to double their study-phase portfolios as AI identifies more drug candidates. The CFO described AI as one lever in a productivity program that added about 90 basis points of operating margin in Q2. So not only is the total addressable market expanding, but the margin they earn servicing this market is expanding too. Iqvia reported Q2 earnings on July 28 and beat on both lines. Revenue was $4.37 billion (+8.7%) vs. $4.3 billion expected, and adjusted EPS was $3.15 (+12.1%) vs. $3.03. R & D net new bookings were $3.15 billion, up 19% with a 1.22x book-to-bill, and contracted backlog grew to $34.2 billion. Management said revenue, EBITDA and EPS all came in above the high end of guidance, and the CEO called it the cleanest quarter of his 25-plus years of reporting earnings. The stock jumped roughly 14% on the print. The pharma tech company is up 18.8% YTD (total return through 10/20), 31% over the last three months, and 79% above its 52-week low of $154.50. That low came during the AI-disruption selloff, when the market worried that AI would shrink the need for hired research firms. The forward P/E fell to about 13x in February from 18x at the end of 2025. At the midpoint of 2026 adjusted EPS guidance ($12.90), IQV now trades at about 21.5x, for roughly 8% expected EPS growth. Iqvia reports Q3 results before the market opens on Tuesday, October 27. Q3 guidance is revenue of $4.32B to $4.39B, adjusted EBITDA of $1B to $1.02B and adjusted EPS of $3.19 to $3.29. Management is guiding to flat EBITDA margins for the year, as lower-margin acquisitions and a fading FX tailwind offset productivity gains, so don’t be worried about a lack of profitability growth in coming quarters. The stock has rallied 79% off its low, let’s take a look at how to play this as the company heads into its Q3 print. Risk management: Josh — The set-up I’m always looking for is higher highs and higher lows and Iqvia fits the mold perfectly. The stock bottomed near $155 in the spring, made a higher low near $163 in June, and cleared its 200-day in July. The second quarter report Sean described above sent it gapping higher on heavy volume, with the candle opening near $233. The gap was tested in early August when the stock slipped to $227, another higher low, and buyers took over from there. Since late August it has held a range between $250 and $279, with the rising 50-day climbing up to meet it. The dip to the $250 area in early October was bought at the same spot as the September low. The stock traded around $274 this morning, with the 50-day at $262 and the 200-day at $208. The September high near $279 is the level to clear. With RSI at 63, momentum is rebuilding after a full reset. It ran into the mid 70s in late August, then washed out to the low 40s on the early October dip without the stock losing its range. Anyone who wanted out has already been cleaned up. RSI has climbed back more than twenty points in two weeks as the stock presses the top of the range, and it still has room before it gets stretched. Traders and investors can use the same line here, $250. That’s where the September low and the early October low both landed, two tests of the same spot, and it’s the floor of the range that has held since August. A close below it says the range has broken and the higher lows are gone. The chart will let you know in short order. Investors can wait for the weekly close to make the call. Iqvia reports Q3 next week, and an earnings report can gap a stock through any level before you get a chance to act on a close. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
About the Author
