Icon sales up 10% in Q1

By Nick Taylor

- Last updated on GMT

Related tags: Revenue

Icon sales up 10% in Q1
Icon posted double-digit year-on-year sales growth and an uptick, excluding one-off charges, in operating income.

Sales of $252m (€191m) and net income of $9m, up seven per cent excluding non-recurring charges, were broadly in-line with analysts’ expectations. Icon also continued to grow its backlog.

We continue to see the benefits of our strategic investment decisions, with record gross business wins of $485m, resulting in a backlog increase of 23 per cent year-on-year, revenue of $252m up 10 per cent on last year and earnings of 15 cents​”, Ciaran Murray, CEO of Icon, said

With or without non-recurring charges, total costs were up by around 10 per cent on the back of expansions to handle big clients such as Pfizer. Backlog also grew though and conversion of this will drive sales growth.

At this point we see…probably at least three quarters [of accelerating organic revenue growth] for Icon, which…should bring expanding margins​”, Tim Evans, senior analyst at Wells Fargo, wrote in a note upgrading his rating of Parexel to outperform. Evans kept a ‘market perform’ rating on Icon.

Icon and Parexel are in similar situations but many analysts are more positive about the latter. David Windley, equity analyst at Jefferies & Company, wrote that “staffing status, hiring trends, and labour inflation​” at Icon could stop it achieving its 2013 margin goals and as such he remains “sceptical​”.

Others are also concerned with the optimism of guidance from Icon. John Kreger, equity analyst at William Blair, wrote last week that the outlook at Icon “leaves little room for error, such as start-up delays​”.

Icon is projecting improved performance at its central laboratory, but the unit, described by Evans as a “perennial underperformer​”, has struggled for quarters. Evans has doubts about the likelihood of an improvement and said there is “clearer visibility​” for an upturn at Parexel’s eClinical business unit.

Related topics: Clinical Development, Phase III-IV

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