On Tuesday, Deutsche Bank (ETR:DBKGn) adjusted its stance on Veradigm Inc (NASDAQ:MDRX), downgrading the stock from Buy to Hold and lowering the price target to $10 from the previous $15. The revision reflects concerns over the company's financial health following recent negative disclosures and the cash spent on the ScienceIO acquisition.
The bank cited a less compelling valuation for Veradigm, as recent developments have deteriorated the company's financial profile. The new price target is based on a 9x multiple of the firm's 2024 estimated earnings before interest, taxes, depreciation, and amortization (EBITDA), which is derived from non-GAAP and unpublished financial results.
Veradigm's revised target price places it at the lower end of its peer group's trading range within the life sciences and provider-based sectors. This adjustment aligns with the company's projected EBITDA growth rate but includes a discount due to Veradigm's inability to provide audited financials. The lack of scale in its product segments and absence of immediate catalysts to increase share value further justify the discount.
Deutsche Bank also highlighted potential downside risks to its assessment, including the possibility of losing high-profile customers, regulatory changes affecting healthcare IT spending, increased competition, and continued delays in financial reporting.
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