Medpace Earnings: Macroeconomic Issues Will Affect 2025 Growth; Focus on Efficiency to Boost Margins

Narrow-moat Medpace reported mixed 2024 results. Revenue increased to $2.1 billion, up 11.8% from $1.9 billion in 2023, but the company continues to face challenges from elevated cancellation levels, resulting in a weak book/bill ratio of 0.99. Net new business awards were $529.7 million in the fourth quarter, a decrease of 13.8% from the prior-year period. The shares fell nearly 8% on Feb. 11 as management’s 2025 revenue guidance fell short of expectations; the outlook is for $2.11 billion-$2.21 billion in revenue, implying growth of 0%-4.8% over 2024. Medpace’s stock price is falling closer to our $296 fair value estimate, but we still view it as overvalued, trading about 11% above our valuation.