On Thursday, Piper Sandler reiterated its Overweight rating on shares of Phreesia Inc . (NYSE: NYSE:PHR) with a consistent price target of $30.00. Following Phreesia's report of a substantial beat in F2Q adjusted EBITDA, the firm expressed a positive outlook on the company's financial performance.
Phreesia's revenue slightly surpassed consensus expectations, driven by strong additions in Active Healthcare Service Clients (AHSC) and a solid Subscription Revenue yield, which helped to balance the anticipated weaker Payments Revenue.
The company has updated its FY25 adjusted EBITDA guidance while keeping the revenue outlook unchanged. Additionally, Phreesia provided an early framework for FY26.
Piper Sandler's analysis suggests that by FY28, the combination of revenue growth and adjusted EBITDA margin could reach 30%. The firm anticipates that Phreesia will make strides towards this goal in FY26 and FY27, forecasting a shift to a lower, yet stable, double-digit growth rate as profitability increases.
During the earnings call on Wednesday, Phreesia advised the market to prepare for an "initial descent," indicating a gradual approach towards sustainable growth and profitability. Piper Sandler expects that if consensus estimates adjust accordingly, Phreesia's transition should be smooth. The Overweight rating and price target reflect the firm's confidence in Phreesia's growth trajectory and its ability to achieve its financial targets in the coming years.
InvestingPro Insights
As Phreesia Inc. (NYSE: PHR) navigates its path towards sustainable growth, recent data and analyst insights from InvestingPro provide a nuanced perspective on the company's financial health and future prospects. Analysts have recently revised their earnings upwards for the upcoming period, signaling confidence in Phreesia's financial trajectory. Despite these positive revisions, analysts do not expect the company to be profitable this year, emphasizing a focus on long-term growth over immediate returns.
InvestingPro data shows that Phreesia is trading at a high Price / Book multiple of 5.87, reflecting a premium that investors are willing to pay for its book value as of the last twelve months leading up to Q1 2025. This valuation comes amidst a backdrop of a 23.98% revenue growth during the same period, indicating robust top-line expansion. Additionally, the company has demonstrated a strong return over the last three months, with a 23.07% price total return, suggesting a positive market sentiment.
For investors seeking a deeper dive into Phreesia's performance and potential, InvestingPro offers additional insights and metrics. To explore further, visit https://www.investing.com/pro/PHR for a comprehensive list of InvestingPro Tips, including analysis on the company's moderate level of debt and other key financial indicators.
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