Medpace Holdings (MEDP-Q)

Very successful, but not well known. Founder still the chairman. Think of it as a professional services firm focused on healthcare. Lots of growth potential. Bookings to billings deceleration, so stock's selling off; should trough around 1x.

MEDP's shares have beeen under pressure in recent months following quarterly earnings where FY2024 revenue guidance was cut. It was not a huge cut as revenue for the full year is now expected to be $2.125B-$2.175B from prior guidance of $2.15B-$2.20B. The big reaction was due to the company's expensive valuation. The stock was trading above 35x forward earnings prior to these earnings and it has now come down to 26x. While growth has showed some signs of slowing, low teens revenue growth is still expected over the next two years and EPS is expected to meaningfully expand. We think it look attractive at these levels for interested investors. 
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MEDP’s share price has been under pressure since the company reported its earnings and is now trading at 29.5x Forward P/E. In the last few years, MEDP managed to grow its topline by double-digits organically, which is a very solid growth rate. The balance sheet is strong, with no long-term debt. The company has a track record of repurchasing shares aggressively. Based on consensus estimates, sales are expected to grow by 12%-15% over the next few years. That being said, MEDP is still not trading at attractive levels yet, we think it can get interesting if it gets to around $340.
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MEDP is a clinical research company that helps smaller biotechs perform research and navigate/move along the pathway to commercialization. They tend to focus on smaller companies, so they tend to feel the booms and busts a bit more than peers but we view it as a solid company that has navigated the last few years well. Fundamentals are quite strong as well and the growth on the top-line is solid in the 15% range over the next two years expected. We think the big question comes down to valuation at 30X forward earnings. We would be comfortable buying it based on the outlook for its earnings and interest rates. 
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