Piper Sandler has adjusted its outlook for Multiplan Corporation (NYSE: MPLN), reducing the price target to $1 from the previous $2 while maintaining a Neutral rating.
The revision follows Multiplan's second-quarter results for the fiscal year 2024, which fell short of consensus estimates.
The company also revised its full-year guidance downward, citing weaker-than-expected revenue yield in its core business and slow bookings for its HST/BST services.
Multiplan's recent earnings report revealed an attrition event that is expected to pose a 3% or approximately $30 million challenge to revenue in fiscal year 2025. The setback is anticipated to negate the year-over-year growth that was previously projected.
Alongside the earnings report, Multiplan announced a change in its financial leadership. As of August 5, 2024, Jim Head has been succeeded by Doug Garis as the Chief Financial Officer.
The firm expressed concerns about the possibility of further yield decline and customer loss in the second half of 2024. Despite these challenges, Multiplan maintains that its long-term target growth rate of 8-10% remains intact, albeit delayed. However, the new CFO has not yet confirmed this outlook.
Piper Sandler has reiterated its Neutral stance on Multiplan's stock, revising the price target to $1. This new target is based on an unchanged 8.4x multiple of the company's lower projected adjusted EBITDA for fiscal year 2025.
MultiPlan Corporation's Q2 2024 earnings report showed a revenue decrease of 1.9% year-over-year to $233.5 million. Despite this, the company noted an 8% increase in sales and double-digit growth in its pipeline.
In a strategic shift, MultiPlan is transitioning towards a data and technology-focused approach, with new products Plan Optics and BenInsights successfully sold. The company also announced a CFO transition, with Doug Garis stepping in to replace the departing Jim Head.
Additionally, MultiPlan revised its full-year 2024 revenue guidance to between $935 million and $955 million. The company also recorded a noncash impairment charge of $553.7 million. As part of recent developments, the company has added four new clients and celebrated a key TPA win.
InvestingPro Insights
In conjunction with the recent outlook adjustment by Piper Sandler, current InvestingPro Data and Tips offer additional context for Multiplan Corporation (NYSE:MPLN). The company's market cap stands at $260.68 million, reflecting the size and scale of its operations. Despite recent challenges, management's aggressive share buyback activity signifies a commitment to shareholder value. However, the stock has experienced a significant decline over the past week, month, and year, with a 1-week price total return of -10.31% and a 1-year price total return of -78.06%, indicating notable market volatility.
InvestingPro Tips highlight that Multiplan's valuation implies a strong free cash flow yield, which could be attractive to investors looking for potential value plays. Nonetheless, analysts remain cautious, not expecting the company to be profitable this year, with net income projected to drop. For those considering an investment in Multiplan, it's worth noting that the stock does not pay a dividend, which may influence income-focused investors.
For those seeking a deeper dive into Multiplan's financial health and future prospects, additional InvestingPro Tips are available, offering a comprehensive analysis of the company's performance and outlook.
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