Jefferies has upgraded Medpace to Buy, citing a rebound in biotech funding and limited near-term risk from artificial intelligence. The brokerage highlighted that biotech funding rose 56% in the second half of 2025, with the fourth quarter marking a record period. Given Medpace's typical four- to six-quarter lag between funding and new contract bookings, Jefferies expects acceleration in bookings in the second half of 2026 and into 2027.

Near-term order trends may remain soft as the company laps a weaker funding environment in late 2024 and early 2025. However, Jefferies said expectations have reset, with improving request-for-proposal activity and stabilizing cancellations pointing to a pickup later this year. The firm sees the book-to-bill ratio approaching about 1.20x by the fourth quarter of 2026. On artificial intelligence, Jefferies noted that full-service contract research organizations like Medpace face less immediate disruption than firms more exposed to functional service provider models.

Medpace now trades at about 24x expected 2026 earnings, with its valuation relative to the S&P 500 near historical trough levels. The company reports under GAAP and converts more than 100% of net income to free cash flow. Management's 2026 guidance assumes elevated cancellation rates similar to 2024 and 2025, but Jefferies said revenue and earnings guidance could move higher if cancellations ease as funding improves.