Leerink Partners analyst Michael Cherny maintained a Hold rating on Medpace Holdings on July 21 and set a price target of $307.00.
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Michael Cherny has given his Hold rating due to a combination of factors surrounding Medpace Holdings’ recent stock performance and financial metrics. The stock experienced a significant increase of approximately 45% after the second-quarter results, prompting a need to delve deeper into the reasons behind this outperformance and its implications for future guidance. While the stock’s rise is acknowledged, there are still uncertainties that need clarification, particularly regarding the sustainability of the company’s burn rate.
The burn rate has increased by 200 basis points sequentially and 300 basis points year-over-year, raising questions about its impact on growth prospects beyond the second half of fiscal year 2025. Although the company has not yet provided guidance for fiscal year 2026, understanding whether the current burn rate is a temporary anomaly or a new standard is crucial. Additionally, there are concerns about how much of the revenue beat is attributable to pass-through revenue, which could influence both the burn rate and future earnings potential. These factors contribute to the Hold rating as investors await further clarity.
In another report released yesterday, UBS also reiterated a Hold rating on the stock with a $300.00 price target.
MEDP’s price has also changed moderately for the past six months – from $347.520 to $308.880, which is a -11.12% drop .