Citi cuts Phreesia stock price target to $33 from $35, keeps Buy rating

On Wednesday, Citi analyst Daniel Grosslight adjusted the price target for Phreesia Inc . (NYSE:PHR) stock, reducing it to $33.00 from the previous $35.00 while maintaining a Buy rating on the shares. Currently trading at $23.83, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $28 to $35. Grosslight’s analysis followed Phreesia’s recent financial results, which he described as fundamentally solid, despite some areas performing below expectations.

Phreesia’s Network Solutions segment experienced slower growth than anticipated, posting a 15.5% year-over-year increase but a 5% quarter-over-quarter decline. However, this was largely compensated by stronger performance in Subscription and Payments revenue. The company’s overall revenue growth remains robust at 17.8% over the last twelve months, with a impressive five-year CAGR of 27%. Grosslight highlighted that Phreesia’s revenue from providers is benefiting from upselling subscription modules and acquiring larger clients with higher volumes of monetizable activities. An additional $1 million in one-time services revenue also contributed to the subscription revenue boost.

The company’s overall revenue grew by 14.5%, which was in line with both Citi’s and consensus expectations. Annual Healthcare Service (NASDAQ:HCSG) Checks (AHSCs) increased by 8.5% year-over-year, matching predictions, while provider revenue per AHSC saw a 5.2% growth, exceeding expectations by 3%. Notably, Phreesia’s adjusted EBITDA surpassed estimates by $3 million to $4 million, attributed to SG&A efficiencies that balanced out lower-than-expected payments gross margins, which included a one-time interchange fee of approximately $170,000, and increased R&D expenses.

Phreesia maintained its revenue guidance for FY26, projecting a growth of 12%-15%. Additionally, the company raised its adjusted EBITDA guidance from the previous range of $78 million to $88 million to a new range of $85 million to $90 million, marking an increase of $4.5 million at the midpoint. This upward adjustment in EBITDA guidance reflects Phreesia’s confidence in its financial trajectory and operational efficiencies. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with particularly strong marks in growth and cash flow metrics. For deeper insights into Phreesia’s financial health and additional ProTips, including earnings forecasts and debt levels, check out the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Phreesia Inc. reported its first-quarter 2025 earnings, surpassing analyst expectations. The company achieved an earnings per share (EPS) of -$0.07, outperforming the forecast of -$0.12. Revenue reached $115.9 million, slightly above the anticipated $114.92 million, marking a 15% year-over-year increase. Additionally, Phreesia raised its adjusted EBITDA outlook for the full year to a range of $85-$90 million, reflecting confidence in its strategic initiatives. The company continues to expand its client base, adding 70 new healthcare services clients this quarter. Phreesia is also focusing on AI integration and product innovation, which are central to its strategy for enhancing client solutions. Furthermore, Phreesia increased its adjusted EBITDA margin to 18%, with positive operating cash flow of $14.9 million and free cash flow of $7.5 million. Analysts from firms like JPMorgan and Truist Securities have shown interest in the company’s network solutions and provider market strategies, indicating a positive outlook for Phreesia’s growth.

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