The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how drug development inputs & services stocks fared in Q2, starting with IQVIA (NYSE: IQV).

Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.

The 8 drug development inputs & services stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.4%.

Luckily, drug development inputs & services stocks have performed well with share prices up 11% on average since the latest earnings results.

IQVIA (NYSE: IQV)

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE: IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

IQVIA reported revenues of $4.02 billion, up 5.3% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a satisfactory quarter for the company with full-year revenue guidance slightly topping analysts’ expectations.

IQVIA delivered strong financial results, with revenue above target and profit towards the high-end of expectations,” said Ari Bousbib, chairman and CEO of IQVIA.

IQVIA delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 20.2% since reporting and currently trades at $191.05.

Is now the time to buy IQVIA? Access our full analysis of the earnings results here, it’s free.

Best Q2: West Pharmaceutical Services (NYSE: WST)

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

West Pharmaceutical Services reported revenues of $766.5 million, up 9.2% year on year, outperforming analysts’ expectations by 5.6%. The business had a stunning quarter with an impressive beat of analysts’ full-year EPS guidance estimates and full-year revenue guidance exceeding analysts’ expectations.

The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $243.09.

Is now the time to buy West Pharmaceutical Services? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Azenta (NASDAQ: AZTA)

Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ: AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Azenta reported revenues of $143.9 million, flat year on year, falling short of analysts’ expectations by 3.8%. It was a softer quarter, leaving some shareholders looking for more.

Azenta delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 6.1% since the results and currently trades at $30.42.

Read our full analysis of Azenta’s results here.

UFP Technologies (NASDAQ: UFPT)

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ: UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

UFP Technologies reported revenues of $151.2 million, up 37.2% year on year. This number met analysts’ expectations. Overall, it was a satisfactory quarter as it also logged a beat of analysts’ EPS estimates.

UFP Technologies scored the fastest revenue growth among its peers. The stock is down 1.3% since reporting and currently trades at $223.32.

Read our full, actionable report on UFP Technologies here, it’s free.

Charles River Laboratories (NYSE: CRL)

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Charles River Laboratories reported revenues of $1.03 billion, flat year on year. This result beat analysts’ expectations by 4.6%. It was a stunning quarter as it also put up a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates.

The stock is down 6.3% since reporting and currently trades at $156.98.

Read our full, actionable report on Charles River Laboratories here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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