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Investing.com - Bernstein downgraded agilon health Inc (NYSE:AGL) from Outperform to Market Perform on Wednesday, slashing its price target to $1.40 from $4.00 due to worse-than-expected margin pressures. The company, currently valued at $518 million, has seen its stock plummet 73% over the past year, with InvestingPro data showing concerning gross profit margins of -1.76%.
The downgrade follows agilon’s disappointing quarterly results, which showed a medical margin of negative $53 million, primarily driven by lower-than-expected risk adjustment revenue for 2024 and 2025. Despite generating $5.9 billion in revenue, the company reported an EBITDA of -$347.3 million in the last twelve months.
Bernstein cited concerns about agilon’s reduced capital cushion, which increases the company’s cost of capital, along with cash flow uncertainty stemming from the lower risk adjustment revenue baseline and withdrawn fiscal year 2025 guidance. InvestingPro analysis reveals 11 additional key insights about agilon’s financial health and market position, available exclusively to subscribers.
Despite the downgrade, Bernstein maintains a positive outlook on the Medicare Advantage sector turnaround and its potential impact on agilon, particularly noting the 5% Medicare Advantage rate increase expected for 2026.
The research firm also anticipates stable medical cost trends and improved contract pricing for 2026, though cash flow cushion and slower revenue growth remain concerns as the company works to accelerate its medical cost turnaround.
In other recent news, agilon health Inc. reported second-quarter results that significantly missed analyst expectations. The company pre-announced these results, revealing a $75 million shortfall in revenue and a $111 million miss on medical margin. Additionally, agilon health’s EBITDA projections were off by $55 million, leading to a suspension of its full-year guidance. Barclays (LON:BARC) responded to these developments by lowering its price target for agilon health to $1.50, maintaining an Underweight rating. Similarly, BofA Securities reduced its price target to $1.30, keeping an Underperform rating on the stock. The company also faces leadership changes, with CEO Steven Sell stepping down. These factors have contributed to agilon health’s current market challenges.
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