Jefferies changes rating on major contract research organizations, upgrading IQVIA Holdings and Charles River Laboratories to Buy while cutting ICON to Hold.
Contract research organizations (CROs) provide outsourced clinical trial and drug development services to pharmaceutical and biotech firms.
IQVIA is now our top pick, Jefferies said, pointing to stronger client wins and steadier business trends.
The firm highlighted that IQVIA’s lower reliance on any single customer makes it more resilient to ongoing pharmaceutical restructurings. Jefferies raised its price target on the stock to $225.
ICON, by contrast, faces “too many headwinds to recommend buying,” the note said.
Jefferies flagged customer losses, project cancellations that could approach $1 billion in the third quarter, and continued weakness in biotech-related work. “We think another cut may be coming,” the analysts wrote, trimming their price target on ICON to $175.
On Charles River, Jefferies pointed to improving bookings in its discovery and safety assessment business, along with potential value from a sale of its manufacturing services segment. “Value extraction seems likely and downside limited,” analysts said, giving the company a price target of $195.
The brokerage also kept a cautious stance on Medpace Holdings, calling its valuation “too rich,” and on Fortrea Holdings, citing execution concerns and looming pharma restructurings.
Jefferies noted biotech funding trends have been mixed, with cardiometabolic and autoimmune trial activity holding up but overall cash levels at biotech firms thinning. A recent surge in pharma layoffs adds further pressure.
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