Alignment Healthcare stock climbs with improved prospects through 2027, says Stifel

On Tuesday, Stifel analysts showed confidence in Alignment Healthcare Inc (NASDAQ:ALHC) by increasing the company's price target from $14.00 to $16.00. The firm sustained its Buy rating on the healthcare provider's stock. Analysts highlighted the company's robust Annual Enrollment Period (AEP) results and reiterated the guidance for 2024 and 2025. According to InvestingPro data, the stock currently trades near $13.27, with analyst targets ranging from $8 to $17, reflecting a strong consensus recommendation of 1.77 (Buy).

Alignment Healthcare's performance has been notable, distinguishing the company from competitors. Its technology-driven Medicare Advantage (MA) plan has consistently demonstrated superior patient management compared to traditional offerings.

This has allowed Alignment to capture market share while others have faced challenges such as the V28 initiative, the 2025 rate notice, and a post-pandemic environment that has been tough on star ratings.

The company's success is reflected in its impressive 43.5% revenue growth over the last twelve months, though InvestingPro analysis indicates challenges with profitability metrics.

The company's stock saw a significant uptick, trading up 14% on Tuesday, contrasting with a flat performance from the S&P 500. Alignment's current valuation stands at 0.9 times its 2025 revenue or 34 times EBITDA. Analysts consider this valuation appealing for a company that is just beginning to surpass the breakeven point, especially given the anticipated positive momentum over the next three years.

The positive outlook for Alignment is further supported by the last year of V28 in 2026, which is expected to present additional opportunities for market share gains. Moreover, changes in star rating mechanics in 2027 are predicted to provide further tailwinds. Over the weekend, the 2025 advanced rate notice was published, with outcomes that were more favorable than many had anticipated.

This development, along with expectations of further support from the new administration, suggests additional positive drivers for Alignment's performance. With a market capitalization of $2.5 billion and a "GOOD" overall Financial Health score from InvestingPro, the company appears well-positioned for future growth despite current profitability challenges.

In their commentary, Stifel analysts stated, "Results Continue to Outpace Market with 3 Years of Tailwinds Ahead." They emphasized that Alignment's strategic positioning and technological edge have set the stage for continued success and market share acquisition in the coming years.

In other recent news, Alignment Healthcare has been in the spotlight for its impressive growth.

The company reported a 35% year-on-year increase in health plan membership, reaching approximately 209,900 members as of January 1. Projections for the future are also promising, with an anticipated membership growth to between 225,000 and 231,000 by the end of 2025.

In terms of financial performance, Alignment Healthcare's third-quarter results for 2024 revealed a 58% increase in health plan membership and a 52% increase in total revenue, amounting to $692 million. The company's adjusted EBITDA was also positive at $6 million, marking its second consecutive quarter of profitability.

TD Cowen, a financial services firm, responded to Alignment Healthcare's strong Q3 results by raising its price target for the company from $10.00 to $13.00, while maintaining a Buy rating on the stock. The firm's decision was influenced by Alignment Healthcare's effective strategic plan and its positive outlook for financial performance and growth potential.

In addition to these developments, Alignment Healthcare reaffirmed its full-year guidance ranges for 2024 and expressed confidence in achieving an adjusted EBITDA of over $40 million by 2025. The company's management is also expecting at least a 20% growth in Medicare Advantage membership, further solidifying its position in the healthcare market.

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