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On Monday, Canaccord Genuity maintained a Buy rating on Waystar Holding (NASDAQ:WAY) and raised its price target from $42.00 to $50.00, with the stock currently trading at $42.21. The firm’s analyst Richard Close attributed the increased target to Waystar’s significant growth over the past year, which was amplified by the Change Healthcare (NASDAQ:CHNG) cybersecurity event in early 2024. The company’s net revenue retention rate (NRR) of 110% was highlighted as a key indicator of its successful "land and expand" strategy. According to InvestingPro data, the stock has shown remarkable strength, with analysts maintaining a Strong Buy consensus and price targets ranging from $34 to $55.
Waystar’s performance has been robust, and the company capitalized on the Change Healthcare incident, adding durable client relationships. The strength is reflected in its impressive 103.91% return over the past year and nearly 60% gain in the last six months, as reported by InvestingPro. According to Close, 30% of these new clients have shown interest in adopting additional software modules. Waystar’s recent product developments, such as AltitudeAI in collaboration with Google (NASDAQ:GOOGL) Cloud and the integration of AltitudeCreate into its denial and appeal management solution, exemplify its commitment to innovation and efficiency.
The analyst pointed out that despite the expected normalization in revenue growth, Waystar’s initial guidance for 2025 remains positive. The company has demonstrated strong momentum with revenue growth of 19.28% in the last twelve months, reaching $943.55 million. This outlook takes into account the approximately $34 million in accelerated revenue recognized in 2024 due to the Change Healthcare incident, as well as the contributions from mid-2023 acquisitions like OliveAI assets and HealthPay24.
Waystar’s ability to sustain high single to low-double digit growth rates over the next few years was also noted, with an emphasis on maintaining strong adjusted EBITDA margins of around 40%. Close believes that the demand for technological solutions in healthcare will continue, and providers will seek trusted partners to leverage new technologies effectively.
In conclusion, Canaccord Genuity expects Waystar to experience solid growth in the coming years, reinforcing its Buy rating and raising the price target to $50. The company’s strategic moves and product enhancements position it favorably in the market, catering to the ongoing demand for efficient technology solutions in the healthcare industry. InvestingPro subscribers have access to 12 additional exclusive ProTips and comprehensive financial metrics for Waystar, including detailed Fair Value analysis and growth projections, available in the Pro Research Report.
In other recent news, Waystar Holding Corp. reported strong financial results for the fourth quarter of 2024, with revenue reaching $244 million, marking an 18% increase compared to the same period last year. Earnings per share exceeded forecasts at $0.29, contributing to a positive outlook for 2025, with expected revenue growth between 7% to 10%. In a related development, Waystar announced a proposed public offering of 18 million shares by investment funds affiliated with EQT AB (ST:EQTAB), Canada Pension Plan Investment Board, and Bain Capital, LP. This offering is led by J.P. Morgan, Goldman Sachs & Co. LLC, and Barclays (LON:BARC) as joint lead book-running managers.
Analyst firms have responded positively to Waystar’s performance. Goldman Sachs raised its price target for Waystar shares to $52, maintaining a Buy rating, while Evercore ISI increased its target to $50, keeping an Outperform rating. Both firms highlighted Waystar’s consistent outperformance and potential for continued growth due to market conditions and strategic initiatives. The company’s recent success is partly attributed to increased demand following a cyberattack on competitor Change Healthcare, which shifted market dynamics in Waystar’s favor. Waystar’s management has also launched new AI-driven products, enhancing operational efficiencies and contributing to the company’s robust financial health.
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