Medpace (NASDAQ:MEDP): Strongest Q3 Results from the Drug Development Inputs & Services Group

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 Medpace (NASDAQ:MEDP) 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%.

Thankfully, share prices of the companies have been resilient as they are up 9.2% on average since the latest earnings results.

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. This print exceeded analysts’ expectations by 2.7%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ organic revenue estimates and a solid beat of analysts’ full-year EPS guidance estimates.

Medpace scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 13.4% since reporting and currently trades at $619.75.

We think Medpace is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

UFP Technologies (NASDAQ:UFPT)

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

UFP Technologies reported revenues of $154.6 million, up 6.5% year on year, outperforming analysts’ expectations by 3.3%. The business had a very strong quarter with an impressive beat of analysts’ revenue and EPS estimates.

The market seems happy with the results as the stock is up 11.5% since reporting. It currently trades at $221.97.

Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free for active Edge members.

Slowest Q3: 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, exceeding analysts’ expectations by 1.6%. Still, it was a slower quarter as it posted EPS in line with analysts’ estimates.

Interestingly, the stock is up 22.9% since the results and currently trades at $36.86.

Read our full analysis of Azenta’s results here.

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. This print topped analysts’ expectations by 0.5%. However, it was a mixed quarter as it failed to impress in some other areas of the business.

IQVIA delivered the highest full-year guidance raise but had the weakest performance against analyst estimates among its peers. The stock is up 4.7% since reporting and currently trades at $227.60.

Read our full, actionable report on IQVIA here, it’s free for active Edge members.

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 number beat analysts’ expectations by 2.1%. Overall, it was a very strong quarter as it also recorded a solid 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 $274.44.

Read our full, actionable report on West Pharmaceutical Services here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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