ICON Gets Some Love from Investors Business Daily

By: TraderMark Saturday, August 09, 2008 12:42 PM

Symbols: CVD, ICLR, PRXL

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But unlike larger firms such as Covance (NYSE:CVD - News), Parexel (NasdaqGS:PRXL - News) and Charles River Labs (NYSE:CRL - News), Icon is based outside the U.S., in Dublin, Ireland.

About half of the firm's revenue comes from outside the mature and slowing U.S. clinical-trial market.

Icon's net business wins in the second quarter jumped 47% from a year earlier to $337 million. Total revenue in the quarter rose 48.5% to $218.3 million.

The backlog at the end of June stood at $1.6 billion, up 56% from a year earlier.

Icon is gaining on rivals, says Kreger of William Blair. "When we talk to people in the industry, we consistently hear them mentioned as the company that appears to be rising above the fray," Kreger said. "This is a service business, and they are doing excellent work -- on time, on budget, with clean data."

Icon's core business as a project manager of clinical trials involves oversight of the physicians who enroll patients and the data that are collected. The firm also has a staffing business for clients who want extra help to self-manage their own studies and a central lab that processes lab tests.

"The barrier to entry in this business is all about a track record," Kreger said. "A client is unlikely to hire a company that doesn't have a track record."

Icon works in a broad number of therapies for most of the major drug and biotech companies. A little more than 20% of revenue comes from biotech firms. Oncology trials account for the largest portion of the firm's backlog, followed by heart disease.

Awards are getting larger, CEO Gray said in the conference call. In the second quarter, 12 awards were over $5 million. "That's a feature of more phase three programs going on and the amount of data required," Gray said.

ICON trades at 33x forward estimates but since we no longer worry about fundamentals in these here parts we are looking to see if the chart below is a potential top top (negative) or has breakout potential (bullish) on a close above $85 or so. Valuation means nothing to these computers. It's all trend.

Long WuXi PharmaTech in fund; no personal position

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