Wednesday's IBD 50 Stocks To Watch pick — Medpace — is one of the top stocks to buy and watch, as it tries to break out past its latest buy point after reporting "almost unbelievable" earnings results this week. MEDP stock rallied 4% midday Wednesday.
Stocks To Buy And Watch: Medpace
Medpace is a contract research organization that conducts clinical trials, mostly for small and mid-size biotech and biopharma customers.
The company reported strong Q3 earnings results late Monday, earning $2.05 per share on revenue of $383.7 million. Earnings grew 59% vs. the year-ago period while sales jumped 30%. Q3 EPS came in 58 cents ahead of estimates while sales beat consensus by $26.5 million.
Shares soared nearly 38% after the news.
In a late Monday note, Jefferies analyst David Windley called the outperformance in EBITDA — earnings before interest, taxes, depreciation and amortization — up 23% to $89.3 million — "almost unbelievable."
IBD Stock Ratings
MEDP stock boasts a perfect 99 Earnings Per Share Rating and a best-possible "A" SMR grade, according to IBD Stock Checkup. The SMR Rating analyzes a company's sales, margins and return on equity, scaling results from "A" (the best) to "E" (the worst).
Medpace grew earnings by an average 48% over the last three quarters while sales grew a more modest 27%. In 2021, pretax margins and return on equity measured 18% and 21%, respectively.
This stock to buy and watch shows a strong 96 out of a perfect 99 IBD Composite Rating, ranking it first in the Medical-Research Equipment and Services industry group.
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Medpace Stock Breaks Out Past New Buy Point
Medpace stock is trying to break out past a cup base's 231.10 buy point, according to IBD MarketSmith pattern recognition. Shares rallied as much as 7.9% Wednesday to their intraday high of 235.72. The stock pared gains to about 4% midday and is back below the buy point.
If the stock retakes the buy point into the close, the 5% chase zone goes up to 242.66.
The relative strength line hit a new high this week, confirming the stock is a market leader. A strong RS line at the start of a new stock market rally and during a volatile market environment is a key technical indicator of strength.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
