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Ever since the artificial intelligence (AI) frenzy began, Nvidia (NVDA) has been king, influencing almost every other industry in the process. Anything Nvidia touches turns to gold.
When Nvidia previously announced investments in under-the-radar companies such as SoundHound (SOUN) and Serve Robotics (SERV), their stocks have quickly attracted investor attention. Now, most companies are keen to collaborate with Nvidia to strengthen their position in the AI game. One such company is Iqvia Holdings (IQV).
Valued at $35.5 billion, IQV stock has gained 0.07% so far this year, compared to the S&P 500 Index ($SPX) gain of 4.2%. Let’s find out how teaming up with the chip giant could boost this under-the-radar healthcare stock.
What Does Iqvia Holdings Do?
Founded in 2016, Iqvia Holdings offers advanced analytics, technology solutions, and clinical research services specifically tailored to the life sciences industry. The company’s revenue has increased significantly over the last 10 years as technology has advanced. Revenue increased from $5.4 billion in 2014 to $15.4 billion by 2024. In the most recent fourth quarter, total revenue increased by 2.3% to $3.9 billion. For the full year 2024, revenue rose 2.8% year-over-year to $15.4 billion. Adjusted earnings per share (EPS) for Q4 stood at $3.12, a 9.9% increase, while rising 9.1% for the full year to $11.13. Both revenue and earnings surpassed consensus estimates. The company ended the year with a $31.1 billion backlog, which represents revenue that has yet to be recognized. Iqvia expects about $7.9 billion of this backlog to be translated into revenue over the next year.
A significant highlight of the quarter was the generation of $721 million in free cash flow, bringing the total for the year to $2.1 billion. This enabled the company to repurchase $1.35 billion in shares, showing its commitment to returning capital to shareholders. Generating free cash flow will also help the company reduce its debt, which currently stands at $13.9 billion, with cash and cash equivalents totaling $1.7 billion in 2024.
Partnership With Nvidia Is a Sweet Deal
On Jan. 13, Iqvia announced a strategic partnership with Nvidia to leverage its advanced AI technologies. By combining IQVIA Connected Intelligence and Nvidia’s AI Foundry platform, Iqvia hopes to automate complex workflows, accelerate client solutions, and help bring new treatments to market.
AI adoption in healthcare and life sciences analytics is accelerating as these businesses generate massive amounts of data. With the help of Nvidia, Iqvia aims to develop and optimize AI agents that could reach the market this calendar year. This partnership will give Iqvia access to:
- NVIDIA NIM microservices
- NVIDIA NeMo
- NVIDIA DGX Cloud
- Support from Nvidia’s research and engineering teams
A partnership with Nvidia would establish Iqvia as a leading AI-powered healthcare data company. As a leading provider of advanced healthcare analytics, collaborating with the chip leader will give the company an early mover advantage in AI-powered healthcare analytics. We’ll have to wait and see what this collaboration will yield for Iqvia in the coming quarters. Management anticipates a 4% to 7% increase in full-year 2025 revenue between $15.7 billion and $16.1 billion, as well as a 5% to 9% increase in earnings between $11.7 per share and $12.10.
Analysts covering IQV expect revenue and earnings to grow by 3.4% and 6.9%, respectively, in 2025. Revenue and earnings could rise by 6.07% and 11.2% in 2026, respectively. Trading at 16 times forward earnings and 2 times forward sales, IQV is a reasonable AI-driven healthcare stock to buy right now.
What Does Wall Street Say About IQV Stock?
On Wall Street, overall, Iqvia stock is rated a “Strong Buy.” Out of the 22 analysts who cover IQV stock, 17 rate it a "Strong Buy," one rates it a “Moderate Buy,” and four suggest a “Hold.” Its average price target of $246.96 suggests that the stock can increase by 26% over current levels. However, its high target price of $270 implies upside potential of 37.7% over the next 12 months.
