On Tuesday, Truist Securities adjusted its position on Evolent Health (NYSE:EVH), reducing the price target to $28 from the previous $34 while maintaining a Hold rating on the company's stock. The revision follows Evolent Health's first quarter earnings release and its second quarter 2024 outlook, along with the company's updated revenue forecast for the year and comments about claims visibility and a rise in leading indicators observed in March.
The analyst from Truist Securities updated the financial model for Evolent Health, revising the full year 2024 and 2025 revenue projections to $2.59 billion and $2.83 billion, up from the earlier estimates of $2.47 billion and $2.70 billion, respectively. Adjusted EBITDA estimates for the same periods were also modified, now standing at $249 million for 2024 and remaining at $317 million for 2025. These changes come despite the previous estimates being $250 million and $317 million.
The new price target of $28 is based on approximately 12 times the firm's 2025 adjusted EBITDA estimates. This is a decrease from the prior target, which was set at approximately 14 times the estimated adjusted EBITDA. The adjustment reflects concerns over the near-term claims visibility issues that Evolent Health reported, as well as an uptick in utilization rates that the company experienced towards the end of the first quarter.
Evolent Health's recent communications have highlighted challenges in claims visibility, which is an essential factor for the company's operational performance. The analyst's comments indicate that these challenges have influenced the decision to revise the price target for the stock.
InvestingPro Insights
As Evolent Health (NYSE:EVH) navigates through its claims visibility challenges and utilization rates, it's valuable for investors to consider real-time market data and analytics. According to InvestingPro, Evolent Health's market capitalization stands at $2.72 billion, reflecting the scale of the company within the healthcare solutions industry. Despite recent adjustments to revenue forecasts, the company has experienced significant revenue growth over the last twelve months, up to 46.76%, which may be an indicator of underlying business strength.
InvestingPro Tips reveal a mix of optimism and caution. Analysts predict that Evolent Health will become profitable this year, which could be a pivotal point for the company. However, the stock is currently trading near its 52-week low and has exhibited high volatility, with price movements indicating a bearish trend over the last week, month, and quarter. The RSI suggests the stock is in oversold territory, which could be of interest to investors looking for potential entry points.
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