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On Monday, BofA Securities adjusted its outlook on Astrana Health, Inc (NASDAQ:ASTH), reducing the price target from $55.00 to $49.00 while still upholding a Buy rating on the stock. The company’s shares, currently trading at $26.43, have declined significantly, with a 26.6% drop in the past week alone. According to InvestingPro analysis, the stock’s RSI suggests oversold conditions, potentially presenting an opportunity for value investors. The revision came after Astrana Health reported its fourth-quarter financial results, which delivered mixed signals. While the company managed to align with consensus EBITDA estimates of $115.75 million, it fell short on its MLR-equivalent cost of service ratio by several percentage points. This shortfall was somewhat mitigated by a reduction in general and administrative expenses. The company maintains a healthy financial position, with InvestingPro assigning a "GOOD" overall Financial Health score.
Astrana Health also provided an adjusted EBITDA forecast for 2025, projecting a modest 5% growth on a comparable basis, excluding investments in new markets and integration costs. This is in contrast to the 28% revenue increase the company anticipates. The analyst at BofA Securities noted that the heightened MLR pressure combined with a less-than-optimistic outlook has led to a moderate decrease in confidence. Consequently, forward estimates were revised downward, prompting a reduction in the price objective to $49, based on the same 15x EBITDA multiple but applied to the lower estimate.
Despite these revisions, BofA Securities reaffirms its Buy rating for Astrana Health. The firm believes that there is still significant potential for the stock if the company can recapture rates and realize the integration synergies it aims for. The analyst’s statement highlighted the potential for upside, emphasizing the opportunities for Astrana Health to improve its performance and deliver value to shareholders.
In other recent news, Astrana Health reported its fourth-quarter 2024 financial results, revealing a significant revenue increase of 88% year-over-year to $665.2 million. Despite this growth, the company faced a net loss of $7.0 million, contrasting with a net income of $12.4 million in the same period the previous year. For the full year, Astrana Health’s revenue rose by 47% to $2.03 billion, although net income decreased to $43.1 million from $60.7 million in 2023. The company has set ambitious revenue projections for 2025, anticipating between $2.5 billion and $2.7 billion, with adjusted EBITDA expected to range from $170 million to $190 million.
In terms of analyst activity, Truist Securities maintained its Buy rating for Astrana Health with a price target of $50.00, following a detailed discussion with the company’s management. Similarly, Stifel also maintained a Buy rating but lowered its price target from $56.00 to $50.00, citing mixed guidance with revenue in line and EBITDA below consensus. Astrana Health’s recent acquisition of Prospect Health System was highlighted as a strategic move, expected to close in Q2 2025, potentially adding $1.2 billion in revenue and $81 million in adjusted EBITDA annually.
Additionally, the company announced a $15 million investment in AI and automation technologies, aiming to enhance operational efficiencies. The upcoming 10-K filing is anticipated to provide further insights into Astrana Health’s financial health and strategic direction, which investors and stakeholders are likely to monitor closely.
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