Jefferies this week raised its recommendation on ICON plc (NASDAQ: ICLR) to Buy from Hold, even as it reduced its target price to $135, down from the prior $175 target. The firm pointed to valuation metrics it said are difficult to ignore, noting that ICON trades at roughly 11 times free cash flow on a 2026 basis.
In its assessment, Jefferies highlighted the company’s current price-to-earnings ratio of 13.2 and a free cash flow yield near 13%. Data from InvestingPro was cited to indicate that the stock appears materially undervalued relative to a Fair Value estimate.
Management has described recent revenue weaknesses as largely timing-related and limited in scope, according to the note. Jefferies nevertheless flagged that the market may be underestimating the significant regulatory barriers to rapid technology adoption within the clinical research sector - an environment where change can be slow and compliance requirements are high.
The firm additionally expects that productivity gains from artificial intelligence will more likely be plowed back into research and development rather than translating directly into margin expansion in the near term. That view informs Jefferies’ stance on how efficiency improvements will be allocated inside the business.
Jefferies’ analyst also emphasized operational areas requiring attention, including client execution and stabilization of market share. A recent Jefferies-run survey showed a notable uptick in sentiment toward ICON, a development the firm found surprising. Still, the stock has fallen about 50% over the last 12 months. InvestingPro Tips referenced in the research suggest the shares have entered oversold territory, one of more than eight exclusive indicators available to subscribers.
Despite worries about the implications of AI for labor-intensive businesses, Jefferies concluded that the challenges facing ICON are not irreparable.
These analyst comments come alongside an ongoing internal accounting review at ICON that began in late October 2025. The probe focuses on revenue recognition for fiscal years 2023 through 2025 and has prompted the company to withdraw its 2025 guidance.
The accounting review has provoked a range of analyst responses. TD Cowen upgraded ICON to Buy from Hold and set a target of $120, signaling continued confidence from some corners despite the probe. By contrast, Rothschild Redburn moved to downgrade the stock to Neutral from Buy and cut its target to $100. Leerink Partners also downgraded ICON to Market Perform, reducing its price target to $105 and citing uncertainty tied to the accounting review. BMO Capital maintained a Market Perform rating while setting a $100 target, noting the possibility that revenue may have been overstated by under 2% in recent years.
Taken together, the developments leave investors weighing a stretched mix of valuation opportunity, operational fixes, and near-term uncertainty stemming from the accounting review. Jefferies’ upgrade reflects a view that, on valuation alone, the shares are compelling, while the broader market and other brokers continue to balance that view against the ongoing internal review and execution risks.