Icon Plc

Dublin-based contract research firm Icon Plc ( ICLR) is a leveraged buyout target like U.S. competitor Charles River Laboratories because of its modest leverage and depressed trading prices, according to Morningstar. The company trades as an ADR on Nasdaq and specializes in outsourced biotech, pharmaceutical and medical device phase I to IV research projects. In 2011, Icon shares dropped over 20% on a slowing of demand in its key European market, according the Morningstar.

Presently, Icon generates more than 40% of its revenue from Europe. "Icon doesn't have the operational baggage of Charles River, but the stock nonetheless has been trading at depressed levels for quite some time now." Writes Morningstar, who points to larger contract research companies like

Covance ( CVD) and Quintiles as acquirers who could benefit from Icon's businesses. "Its global infrastructure could make the firm an attractive target for a mid-tier competitor looking to build scale to gain entry into the industry's top ranks."

Morningstar gives Icon Plc a five star rating and a fair value of $32 a share, nearly double its current share price of $18.51. The company is expected to earn $9 cents a share in its fourth quarter 2011 results due on Feb. 23, according to Zacks consensus estimates. Analysts give the company an estimated price target of $19 a share on 2012 revenue of $1.16 billion and profit of $58.9 million, according to data compiled by Bloomberg. For more on Icon, see 8 health care buys ahead of earnings.

>>To see these stocks in action, visit the 10 Top Morningstar M&A Stock Picks for 2012 portfolio on Stockpickr.

--Written by Antoine Gara in New York

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