VOL. XCIV, NO. 247
★ EXPANSION-STAGE STOCKS & SCALING SETUPS ★
NO ADVICE
Wednesday, January 14, 2026
Medpace
MEDP · NASDAQ
This analysis is generated by AI and supervised by humans. Scores reflect business model strength, scaling runway, and valuation setup. Mistakes can happen.
Overview
Scientifically-driven, global, full-service contract research organization (CRO) providing Phase I-IV clinical development services to biotechnology, pharmaceutical, and medical device companies.
Thesis summary
Medpace is a high-margin, full-service CRO with a repeatable delivery model and a bookings/backlog engine that can translate into multi-year revenue compounding. After a soft bookings stretch, Q3 2025 showed a clear re-acceleration (book-to-bill 1.20x) with backlog back to ~$3.0B and EBITDA margins holding in the low-20s. If bookings remain >1x and backlog conversion stays ~low-20%s, MEDP can scale revenue with operating leverage while using excess cash flow for aggressive share repurchases, driving strong per-share earnings power.
Investment Thesis
Why Now?
The setup is an inflection in demand indicators: book-to-bill moved from 0.90x (Q1 2025) to 1.03x (Q2 2025) to 1.20x (Q3 2025), and backlog rose to ~$3.0B. Next major checkpoint is FY2025 results and 2026 outlook on February 9, 2026 (earnings) / February 10, 2026 (call), where investors will re-price sustainability of bookings + margin discipline.
Scaling Thesis
The next leg is execution and throughput: (1) convert backlog at ~20%+ quarterly conversion rates without quality slippage, (2) scale global resourcing (hiring/training) to expand trial delivery capacity, (3) maintain disciplined cost structure to keep EBITDA margin in the low-20s, and (4) deploy cash flow into repurchases (reducing share count) to compound per-share earnings even if industry growth is cyclical.
Competitive Moat
High-science, full-service CRO positioning with deep therapeutic and regulatory expertise. Operational playbook and systems to run complex global trials across many countries. Strong economics/cash generation enabling self-funded scaling and meaningful buybacks. Reputation with small/mid-size biopharma clients where execution quality and speed matter.
Key Assumptions
Valuation Scenarios
Illustrative: 2028E revenue $2.8B, 20% EBITDA margin, 13x EV/EBITDA. Assumes demand cools, multiple compresses, and buybacks slow (or occur at less favorable prices).
Illustrative: 2028E revenue $3.4B, 22% EBITDA margin, 18x EV/EBITDA. Assumes stable bookings (>=1.05), steady backlog conversion, and continued share count reduction via buybacks.
Illustrative: 2028E revenue $4.0B, 24% EBITDA margin, 22x EV/EBITDA. Assumes sustained biotech funding tailwind, durable premium multiple, and meaningful operating leverage with ongoing buybacks.
Catalysts
FY2025 results + FY2026 guidance and commentary on bookings/backlog durability.
If 2026 guidance implies sustained growth and management indicates healthy pipeline/booking trends, the market may underwrite a longer demand up-cycle.
Book-to-bill remains >=1.05 for multiple quarters and backlog continues to grow.
Confirms demand normalization and reduces fear that the Q3 spike was a one-off.
Accelerated repurchases using remaining authorization, driving share count down and lifting EPS.
Supports per-share compounding and can cushion valuation during cyclical demand fluctuations.
Risks
Small/mid biotech funding weakens, pushing trial starts out and reducing net new business awards (book-to-bill falls).
Mitigation: Track quarterly book-to-bill and backlog; size position so two weak booking quarters do not force selling.
Cancellations or scope reductions increase, reducing backlog quality and slowing revenue conversion.
Mitigation: Monitor backlog YoY and conversion rate; require conversion staying ~20%+ as a health check.
Pricing pressure from large CRO peers compresses margins, especially if clients push for discounts.
Mitigation: Watch EBITDA margin trend; treat sustained margin <20% as a major warning.
Difficulty hiring/retaining qualified staff (or execution/quality issues) limits throughput and damages reputation.
Mitigation: Track headcount growth, delivery commentary, and any regulatory/quality disclosures in filings.
Compliance failures, data integrity issues, or privacy/cyber incidents create legal and reputational exposure.
Mitigation: Prefer conservative sizing; monitor risk-factor updates and any material incident disclosures.
Aggressive repurchases reduce cash buffer and flexibility if demand unexpectedly turns down.
Mitigation: Track cash balance and authorization usage; prefer entries when cash rebuilds post-buyback waves.
Scale Readiness
Q3 2025 book-to-bill 1.20x with net new business awards up ~48% YoY.
Backlog ~$3.0B and conversion rate ~23% in Q3 2025; backlog growth turned positive YoY.
Backlog conversion improving; scaling relies on sustained staffing and execution quality.
EBITDA margin consistently low-20s; room for leverage if bookings sustain.
Global workforce scaling is a key constraint; hiring/training remains a perennial risk.
Client funding environment improving, but remains cyclical and rate-sensitive.
Large remaining authorization and demonstrated willingness to repurchase heavily.
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.