IQVIA is scored 73 for moat and 50 for management. The management score rests on a return on invested capital of 8.2% and a gross margin of 26.3% — figures that describe returns closer to the cost of the capital behind them. The balance sheet carries debt at 2.49x equity, which magnifies both the returns above and the risk beneath them. The solid moat and mixed management are not the same judgement, and the gap between them is where the argument about this business sits.
Three independent anchors set the price worth paying. Growth is modelled at 7.5% a year, below the 8.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 15.0x. That produces an intrinsic value of $61.64, a 10-CAP price of $158.65 and a payback time price of $178.19, with the value zone set at the highest of the three, $178.19. Today's price of $260.79 is 46% above it.
The price is above the value zone and the business scores 73 for moat and 50 for management. Neither test argues for paying up here.
| Price | $260.79 |
| Market cap | $42.9B |
| P/E ratio | 32.4x |
| Return on invested capital | 8.2% |
| Gross margin | 26.3% |
| Debt to equity | 2.49x |
| Free cash flow yield | 5.3% |
| Growth rate used | 7.5% |
| Growth rate measured | 8.0% |
| Exit multiple assumed | 15.0x |
| Company | Moat | Buy price |
| Waters Corporation (WAT) | 41 | $47.42 |
| Idexx Laboratories (IDXX) | 97 | $197.94 |
| Illumina, Inc. (ILMN) | 48 | $67.65 |
| Agilent Technologies (A) | 64 | $53.70 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of IQVIA rather than accepting ours.