As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the drug development inputs & services industry, including Azenta (NASDAQ:AZTA) and its peers.
Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.
The 8 drug development inputs & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.9%.
Luckily, drug development inputs & services stocks have performed well with share prices up 10.6% on average since the latest earnings results.
Azenta (NASDAQ:AZTA)
Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.
Azenta reported revenues of $159.2 million, up 5.5% year on year. This print exceeded analysts’ expectations by 1.6%. Despite the top-line beat, it was still a slower quarter for the company with EPS in line with analysts’ estimates.
Interestingly, the stock is up 21.3% since reporting and currently trades at $36.40.
Read our full report on Azenta here, it’s free for active Edge members.
Best Q3: Medpace (NASDAQ:MEDP)
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Medpace reported revenues of $659.9 million, up 23.7% year on year, outperforming analysts’ expectations by 2.7%. The business had an exceptional quarter with a solid beat of analysts’ organic revenue estimates and a solid beat of analysts’ full-year EPS guidance estimates.
Medpace pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 9.9% since reporting. It currently trades at $601.02.
Is now the time to buy Medpace? Access our full analysis of the earnings results here, it’s free for active Edge members.
IQVIA (NYSE:IQV)
Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE:IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.
IQVIA reported revenues of $4.1 billion, up 5.2% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a mixed quarter due to its lackluster performance in other areas of the business.
IQVIA delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 6.7% since the results and currently trades at $231.90.
Read our full analysis of IQVIA’s results here.
West Pharmaceutical Services (NYSE:WST)
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE:WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
West Pharmaceutical Services reported revenues of $804.6 million, up 7.7% year on year. This print topped analysts’ expectations by 2.1%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $276.83.
Fortrea (NASDAQ:FTRE)
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ:FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Fortrea reported revenues of $701.3 million, up 3.9% year on year. This number surpassed analysts’ expectations by 8.2%. It was a strong quarter as it also produced an impressive beat of analysts’ revenue estimates and full-year revenue guidance exceeding analysts’ expectations.
Fortrea scored the biggest analyst estimates beat among its peers. The stock is up 29.2% since reporting and currently trades at $12.53.
Read our full, actionable report on Fortrea here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory’s analyst team — all seasoned professional investors — uses quantitative analysis and automation to deliver market-beating insights faster and with higher quality.