On Monday, Stifel made adjustments to its outlook on Accolade Inc. (NASDAQ:ACCD), a healthcare technology company, by reducing the price target to $13.00 from the previous $15.00. Despite this change, the firm maintained its Buy rating on the stock.
The revision comes with an anticipation that Accolade will reaffirm its fiscal year 2025 (ending in February) revenue and EBITDA guidance, which projects a 20% revenue increase and an EBITDA margin between 2-4%. The company's visibility into the fourth quarter of fiscal year 2023 and the calendar year 2024 was deemed high three months earlier, largely due to the annual enterprise selling cycle concluding in September and October.
Stifel's assessment also takes into account current stable employment trends and healthcare utilization, which are believed to support the company's financial visibility. While performance guarantees may affect quarterly results, they are expected to normalize over the fiscal year.
The firm's analysis, assuming a stable economic environment, suggests that the fiscal year 2025 guidance provided by Accolade is reasonable and potentially surpassable, given steady GDP and employment figures. Additionally, management's updated fiscal year 2029 EBITDA margin target, raised from 10-15% to 15-20%, indicates growing confidence. This confidence is attributed to the effects of cost-saving measures and improved utilization rates in end-markets that are returning to normal.
In conclusion, Stifel views Accolade as a relatively stable investment that has the potential to yield a 15-20% compound annual growth rate in a variety of economic conditions.
InvestingPro Insights
In light of the analysis by Stifel on Accolade Inc. (NASDAQ:ACCD), current real-time data from InvestingPro provides additional insights into the company's financial health and market position. Accolade's market capitalization stands at $706.73 million, reflecting the market's valuation of the company. Despite analysts not expecting profitability this year, Accolade has demonstrated a revenue growth of 8.55% over the last twelve months as of Q3 2024, indicating an upward trajectory in sales.
InvestingPro Tips highlight the high shareholder yield and the fact that the company operates with a moderate level of debt, which could be seen as a positive sign for investors looking for a potentially stable investment. However, the stock price volatility and the lack of dividend payments could be a concern for those seeking more predictable returns. With a large price uptick of 34.86% over the last six months, investors may want to keep an eye on the stock's performance, especially with the next earnings date approaching on April 25, 2024.
For those considering an investment in Accolade, it may be worthwhile to explore the additional 7 InvestingPro Tips available on the platform. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could provide more detailed analytics and insights to inform your investment decisions.
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