This Clinical Trials Stock Just Soared 50%. What Caused It to Pop.

Macpace runs clinical trials of experimental medicines on behalf of drugmakers. (CHANDAN KHANNA/AFP via Getty Images)

Medpace Holdings stock soared more than 50% in Tuesday trading after a stellar earnings report showed the clinical trials company is making a comeback.

Shares were up 59% to $490.04 shortly after the opening bell. If gains hold, that’d be Medpace’s largest single-day increase on record, according to Dow Jones Market Data.

It would also bring the stock into the green for the year. Coming into Tuesday trading, shares were down 29% in the past 12 months amid concerns about weak demand from drugmakers for its services.

Despite a significant beat on both top and bottom lines, Jefferies analysts led by David Windley urge caution about the sector. The analyst said that the strength of a few smaller contract research organizations such as Medpace seems largely isolated and “unsustainable with funding down and decision cycles lengthening even further.”

Windley rates the stock Hold with a price target of $285.

Second-quarter earnings came in at $3.10 a share on revenue of $603 million, beating analysts expectations of $2.98 a share on revenue of $539 million, according to FactSet.

The company also hiked its full-year earnings per share guidance to a range between $13.76 and $14.53, up from a range between $12.26 to $13.04, previously.

Write to Elsa Ohlen at elsa.ohlen@barrons.com