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Phreesia stock rated Buy by DA Davidson, strong EBITDA guide expected for FY26

EditorAhmed Abdulazez Abdulkadir
Published 29/11/2024, 13:44
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On Friday, DA Davidson reaffirmed its confidence in Phreesia Inc . (NYSE: NYSE:PHR), maintaining a Buy rating and a price target of $32.00. According to InvestingPro data, this target represents significant upside potential from the current price of $20.30, with analyst targets ranging from $23 to $34.

The firm's optimistic stance comes in anticipation of Phreesia's third-quarter results for fiscal year 2025, which are expected to be released after the market closes on December 9. Additionally, the firm looks forward to the preliminary guidance for the fiscal year 2026 EBITDA.

The analyst at DA Davidson highlighted that the potential rewards of the upcoming EBITDA guidance are favorably skewed. This expectation is based on Phreesia's consistent focus on the payback periods for its investments, which is anticipated to continue driving solid incremental margins for the third consecutive year.

The firm further noted that Phreesia's current market valuation is particularly attractive when compared to its Vertical Software (ETR:SOWGn) industry peers that exhibit similar growth and profitability profiles. InvestingPro analysis supports this view, indicating that Phreesia is currently undervalued, with a market capitalization of $1.17 billion and a moderate debt level. This assessment suggests an undervalued position for Phreesia's stock in the eyes of DA Davidson, relative to the company's potential and performance within its sector.

Investors and market watchers are now awaiting the release of Phreesia's financial results and the FY26 EBITDA guidance, which will offer a clearer picture of the company's financial trajectory and operational efficiency. The company has demonstrated strong revenue growth of 22.1% over the last twelve months, according to InvestingPro data. The forthcoming announcement is set to provide insights into how Phreesia's investment strategies and market positioning might influence its future growth and profitability. Get access to more detailed analysis and 12+ additional ProTips with an InvestingPro subscription.

The reaffirmation of the Buy rating and price target by DA Davidson indicates a continued belief in the company's strategy and financial prospects, as Phreesia heads towards the close of its third quarter and looks ahead to the next fiscal year.

In other recent news, Phreesia Inc. has been the focus of several financial firms following its positive Q2 results. The healthcare software company's revenue increased by 19% year-over-year, totaling $102.1 million.

The adjusted EBITDA rose to $6.5 million, marking an $18 million improvement from the previous year. Baird raised its price target for Phreesia to $34, citing strong growth prospects. Similarly, Truist Securities increased its price target to $31, highlighting expected EBITDA strength and revenue growth.

Piper Sandler maintained its price target at $30, expressing optimism about the company's financial performance. Canaccord Genuity also retained its $34 price target, emphasizing the company's operational efficiency and focus on long-term profitability. Needham reaffirmed its Buy rating and a price target of $29, projecting a potential double in the adjusted EBITDA margin year over year.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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