TD Cowen upgraded ICON plc to Buy from Hold and established a $120 price target, a reduction from its prior $183 target. The clinical research organization’s shares were trading at $88.62 at the time of the update.
The firm cited valuation metrics as supportive of the move. ICON’s price-to-earnings ratio stands at 12.01, and its free cash flow yield is approximately 14%, metrics TD Cowen says point to potential value at current levels despite the company’s recent share-price weakness.
TD Cowen said the stock’s roughly 33% decline after the company disclosed an internal accounting investigation appears to overstate the likely earnings impact. The analyst team models an approximate 2% reduction to revenues beginning in 2026 and continuing thereafter, and interprets that change as corresponding to a roughly 14% reduction in adjusted earnings per share for 2026 and 2027.
Short-term price action has been severe. Data show the stock fell about 33.44% over the course of a single week following the accounting disclosure.
TD Cowen flagged that risks remain. The accounting review is ongoing and the firm also highlighted an artificial intelligence overhang as a concern for the shares. Even so, Cowen described the risk-reward as attractive at roughly 8.3 times its revised 2026 adjusted EPS estimate, and technical indicators place the stock in oversold territory. Separately, consensus forecasts show FY2025 EPS of $13.51.
ICON is an outsourced development services provider serving pharmaceutical, biotechnology and medical device customers. The company has a market capitalization of about $6.77 billion, and its next scheduled earnings report is due February 25.
In recent company developments, ICON disclosed an internal accounting investigation focused on revenue recognition for the fiscal years 2023 through 2025. That disclosure prompted a number of brokerages to revisit ratings and price targets.
Rothschild Redburn lowered its rating on the company to Neutral from Buy and cut its price target to $100, citing concerns tied to the investigation. Leerink Partners downgraded the stock to Market Perform and reduced its target to $105, pointing to uncertainties stemming from the accounting review. BMO Capital trimmed its price target to $100 while keeping a Market Perform stance, and Jefferies reiterated a Hold rating with a $175 price target, noting worries about the company’s backlog and the potential impact of aggressive revenue recognition. One note in the commentary indicated TD Cowen had previously maintained a Hold rating with a $183 price target, observing preliminary indications that revenue may have been overstated by less than 2% in 2023 and 2024.
These adjustments underline the scrutiny of ICON’s revenue recognition practices and the attendant re-evaluation of near-term forecasts by several research shops. The mix of downgrades and retained Hold stances across firms illustrates differing interpretations of the likely magnitude and persistence of any restatements or adjustments that could arise from the ongoing review.
Summary of the situation: ICON faces an internal probe into revenue recognition that covers fiscal 2023-2025. The probe triggered a sharp sell-off in the shares, prompting updated research views. TD Cowen’s upgrade to Buy and the lowered $120 target reflect the firm’s view that the market reaction has priced in more damage than its forecasts support, while other brokerages have adjusted targets and stances downward or retained cautious ratings pending further clarity.