巴克莱美股医疗保健行业美国生命科学与诊断巴克莱医疗大会的5大工具与诊断要点201931835页

EquityResearch18March2019COREBarclaysCapitalInc.and/oroneofitsaffiliatesdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.PLEASESEEANALYSTCERTIFICATION(S)ANDIMPORTANTDISCLOSURESBEGINNINGONPAGE30.Restricted-InternalU.S.LifeScienceTools&DiagnosticsTop5Tools&DxTakeawaysfromtheBarclaysHealthcareConferenceWethinktherewereseveralimportanttakeawaysforourLifeScienceTools&DiagnosticscoveragefromtheBarclaysGlobalHealthcareConference:1)Biopharmaendmarketcommentaryremainsrobust,andwecameawaybullishonread-throughsforThermoFisherandtheCROs.WebelievecommentaryfromacrosstheLifeScienceTools,CRO&CDMOsub-sectorsallalignsaroundthehealthofthebiopharmamarketenvironment.Lookingataudiencesentiment,investorsareexpectingM-HSDgrowthfortheCROsoverthenext3years.Weviewthisasrealistic,andpotentiallyconservative,giventhefundingenvironmentandmaturingbacklogs.2)GeographiccommentarywaspositiveonChinaforLifeScienceToolsinvestment,thoughmorecautiousaroundtheoutlookinEurope.ManagementteamsbelievemarketfundamentalsinChinaaredurableevenasGDPgrowthslows.WebelievetheLifeScienceToolshavebenefittedfromChina’snationalambitionsinthecountry’s5-YearPlan,whichincludesafocusonlifescienceresearch,expandedaccesstohealthcareforthecountry’spopulation,andresolvinglong-termsocietalissues.Commentaryscreenedasmorebullishthanaudienceresponsesentiment,with55%ofrespondentsacrosscompaniesexpressinguncertainty.ComparedtoChina,LifeSciencesToolscommentaryregardingEuropewasmoretempered.Asbackground,PMIsacrossanumberofcountriesinEuropehavemoderatedto50inrecentmonths,whichwouldrepresentacontractionarysignal.RelativetostrongmarketconditionsintheAmericasandinChina,managementteamswerebroadlycautiousonEurope.3)LabCorpandQuestweredebatingseveraltopicswhichwereinfocusforinvestors:A)thestatusofnationalpayornetworkshifts,B)thepotentialforabroaderPAMAimpacttoMedicaidrates,andC)thestatusofanyopt-outclausewithFloridaBlue.Ultimately,weviewtheseasrelativelydiscreteoutcomes–andoneofthelabswillbeprovenrightoneachtopic.Inadditiontoachallengingoperatingenvironment,wethinkthelabsarebeingpenalizedfornothavingconsistentanswersonthesetopics.Thenationallabsnowtradeat13.5xNTMEPS,a2.6xdiscounttotheS&P500.4)Investorscontinuetoviewinternalinvestmentasthebestuseofcapital–representing45%ofoverallweightedaverageresponses.Beyondthat,therewasastrongpreferenceforM&A(35%)–especiallyamongstLifeScienceTools(43%).5)Newproductcommentaryconfirmsourviewthatthereisasignificantlevelofinnovationtakingplaceacrossourcoverage,supportingthedurabilityofgrowth.Jack’sJobBoard:Quidel(QDEL)hasrecentlypostedopeningsfor8TriageFieldSpecialists–whichweviewasabullishsignaheadoftheupcomingtoxicologylaunch.ThecompanyexpectsFDAapprovalwithinthenext30daysfora2Q19launch.Actions:Weraisepricetargetsonpresentingcompanieswithbiopharmaservicesexposure–TMO($300,upfrom$295)andtheCROs:CRL($145,from$135),ICLR($148,upfrom$140),IQV($167,upfrom$160)andLH($173,upfrom$165).Additionally,weraiseourPTonQuidelgivenoptimismaroundtheupcomingtoxicologylaunch($77,upfrom$74).INDUSTRYUPDATEU.S.LifeScienceTools&DiagnosticsNEUTRALUnchangedForafulllistofourratings,pricetargetandearningschangesinthisreport,pleaseseetableonpage2.U.S.LifeScienceTools&DiagnosticsJackMeehan,[e-mail],[e-mail],[e-mail],USBarclays|U.S.LifeScienceTools&Diagnostics18March20192SummaryofourRatings,PriceTargetsandEarningsChangesinthisReport(allchangesareshowninbold)CompanyRatingPricePriceTargetEPSFY1(E)EPSFY2(E)OldNew14-Mar-19OldNew%ChgOldNew%ChgOldNew%ChgU.S.LifeScienceTools&DiagnosticsNeuNeuCharlesRiverLaboratories(CRL)EWEW140.99135.00145.0076.356.35-7.007.00-ICONplc(ICLR)EWEW132.23140.00148.0066.806.80-7.657.65-IQVIA(IQV)OWOW140.98160.00167.0046.306.30-7.257.25-LaboratoryCorp.ofAmericaHldgs.(LH)OWOW152.82165.00173.00511.2011.20-11.8011.80-QuidelCorp.(QDEL)OWOW67.3474.0077.0042.902.90-3.453.45-ThermoFisherScientific,Inc.(TMO)OWOW261.43295.00300.00212.1512.15-13.7513.75-Source:BarclaysResearch.SharepricesandtargetpricesareshownintheprimarylistingcurrencyandEPSestimatesareshowninthereportingcurrency.FY1(E):CurrentfiscalyearestimatesbyBarclaysResearch.FY2(E):NextfiscalyearestimatesbyBarclaysResearch.StockRating:OW:Overweight;EW:EqualWeight;UW:Underweight;RS:RatingSuspendedIndustryView:Pos:Positive;Neu:Neutral;Neg:NegativeBarclays|U.S.LifeScienceTools&Diagnostics18March20193TABLEOFCONTENTSINTRODUCTION.................................................................................................4LinkstoConferenceRecaps........................................................................................................................4Actions:RaisePTsonCRL,ICLR,IQV,LH,QDEL&TMO....................................................................41)BIOPHA