CRO investor concerns over dicey biotech funding environment overdone - Mizuho

Syneos Health

07/03/2022 11:32

** Brokerage Mizuho says recent sell-off in contract drug
developers (CROs), related in part to concerns over weak biotech
funding environment, is overdone 
    ** Recent industry checks confirmed some softness with
private equity investment in emerging biotech start-ups, but
otherwise demand remains unchanged - brokerage
    ** Brokerage maintains "buy" rating on IQVIA Holdings
 IQV.N , ICON PLC  ICLR.O  and Syneos Health  SYNH.O ; cuts PTs
on CROs saying cos can no longer trade at historically high
multiples given uncertainty with future funding environment
    ** Lowers PT on IQV to $270 from $300, ICLR to $272 from
$315 and SYNH to $94 from $109
    ** Mizuho says total biotech funding through public market
has slowed since mid-2021; adds that in coming months demand for
CRO services could be impacted by biotechs reassessing their
pipelines with prioritization to certain programs, pauses on
others, or fewer new trial starts
    ** However, while public biotech funding has been slow,
private market still open for more established biotech players -
brokerage
    ** CRO industry revenue growth is expected to remain strong
in the near- to mid-term, driven by elevated bookings and
backlog, catch-up of previously delayed projects and some
residual level of COVID work, brokerage says; IQV remains
Mizuho's top pick

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BUZZ-Biotech related concerns are overblown, says Baird after
decline in CRO stocks     urn:newsml:reuters.com:*:nL4N2V34N4
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 (Reporting by Manojna Maddipatla in Bengaluru)
 ((manojna.kalyani@thomsonreuters.com; +91  8061822700;))