Wed Sep 25 07:51:41 UTC 2024: ## Medpace Holdings Downgraded by Jefferies Amidst Biotech Funding Slowdown

**Cincinnati, OH** – Medpace Holdings, Inc. (NASDAQ: MEDP), a leading clinical contract research organization (CRO), faced a downgrade in its stock rating from Buy to Hold by Jefferies on Wednesday. The firm also lowered its price target for Medpace shares from $415 to $345.

This downgrade comes despite Medpace’s impressive revenue growth of over 25% per year in 2022 and 2023. However, Jefferies cited the decline in funding for biotechnology companies since the peak in 2020 and 2021 as a key factor in the downgrade.

With reduced funding, biotechnology companies are becoming more cautious with their spending, leading to cancellations and drop-outs of clinical trials. This trend, initially attributed to one-off events by Medpace, appears to be persistent and potentially widening.

Jefferies expects Medpace’s book-to-bill (B2B) ratio for the third quarter to be at the lower end of the 1.04-1.20x range, potentially impacting the company’s 2025 earnings per share by 7%.

Despite the downgrade, Jefferies acknowledged Medpace’s high quality as a CRO and suggested that it could become an attractive investment once the biotech sector stabilizes and expectations are reset.

Medpace’s Q2 2024 revenue surged by 14.6% year-over-year, reaching $528.1 million. The company also raised its 2024 earnings per share (EPS) guidance despite the increased project cancellations, projecting revenues between $2.125 billion and $2.175 billion and EBITDA ranging from $430 million to $460 million.

While Truist Securities maintained a Hold rating on Medpace’s stock due to volatility concerns, setting a price target of $415, TD Cowen and Guggenheim retained their Buy ratings, albeit with revised price targets of $434 and $432, respectively.

Medpace remains optimistic, citing a 13.7% increase in its backlog as of June 30, 2024, reaching approximately $2.9 billion. The company anticipates converting around $1.585 billion of this backlog into revenue over the next twelve months.

The recent developments highlight the mixed performance and complex picture that Medpace presents to investors. Despite challenges stemming from the biotech funding slowdown, Medpace continues to demonstrate strong revenue growth and a robust backlog, leaving investors with a complex outlook on the company’s future.

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