After an interest rate increase last month, the Federal Reserve is expected to raise rates by half-point each in May and June, according to economists polled by Reuters. Furthermore, increased Western sanctions on Russia are intensifying worldwide supply chain disruptions. However…
despite slashed growth estimates, the U.S. economy looks strong enough to sustain its recovery.
According to Freedonia Focus Reports, U.S. nominal GDP is forecast to grow 5.6% per year through 2025. Thus, fundamentally strong growth stocks might offer significant gains amid consistent demand and rising employment opportunities. Investors’ interest in growth stocks is evident in the iShares S&P 500 Growth ETF’s (IVW) 8.6% returns over the past month, compared to the SPDR S&P 500 Trust ETF’s (SPY) 7.5% returns.
Given this backdrop, we think it could be wise to bet on growth stocks IQVIA Holdings Inc. (IQV), West Pharmaceutical Services, Inc. (WST), and Synopsys, Inc. (SNPS), each of which has declined more than 10% in price year-to-date.
IQVIA Holdings Inc. (IQV)
IQV provides advanced analytics, technology solutions, and clinical research services to the life sciences industry in the Americas, Europe, Africa, and the Asia-Pacific. It operates through three segments: Technology & Analytics Solutions; Research & Development Solutions; and Contract Sales & Medical Solutions. IQVIA is based in Danbury, Conn.
On Feb. 15, 2022, Ari Bousbib, IQV’s chairman and CEO, said, “We are now two-thirds of the way through our Vision 22 plan and are on a path to achieving or exceeding our targets. The outlook for our end markets remains favorable and we expect continued strong demand for our differentiated offerings in 2022.”
IQV’s revenues came in at $3.64 billion for the fourth quarter, ended Dec.31, 2021, up 10.2% year-over-year. Its net income came in at $318 million, up 167.2% year-over-year. Its EPS also increased 167.2% year-over-year, to $1.63. The company’s adjusted EBITDA was $828 million, up 12.7% year-over-year.
For its fiscal year 2023, analysts expect IQV’s revenue to increase 9.7% year-over-year to $16.29 billion. Also, the stock’s EPS is expected to grow at an 18.2% rate per annum over the next five years. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 10.6% year-to-date to close Friday’s session at $252.29.
IQV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
IQV has an A grade for Growth and a B grade for Sentiment. Within the Medical – Diagnostics/Research industry, it is ranked #8 of 50 stocks. Click here to see the additional POWR Ratings for Value, Quality, Momentum, and Stability for IQV.
West Pharmaceutical Services, Inc. (WST)
WST designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The Exton, Pa., company operates in two segments–Proprietary Products and Contract-Manufactured Products.
On Feb. 17, 2022, President and CEO Eric M. Green said, “Proudly, we enter the year with a strong outlook in our proprietary products segment and continued HVP growth. Looking ahead, our capital investments and recently announced collaboration with Corning will continue to drive future growth and innovation, as we are well positioned for success in 2022 and beyond.”
WST’s net sales increased 26% year-over-year to $730.80 million for the fourth quarter ended Dec.31, 2021. Its net income came in at $147.70 million, up 50.1% year-over-year, while its EPS came in at $1.93, up 49.6% year-over-year. The company’s gross profit came in at $300.60 million, up 42.4% year-over-year.
Analysts expect WST’s revenue to increase 8.3% to $3.07 billion in 2022. Its EPS is estimated to increase 10.9% to $10.28 in 2023. It surpassed EPS estimates in each of the four trailing quarters. The stock has declined…
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