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Citizens JMP analyst firm reiterated its Market Outperform rating and $36.00 price target on Option Care Health (NASDAQ:OPCH) following meetings with company executives. According to InvestingPro data, the stock appears slightly undervalued based on its Fair Value analysis, with analyst targets ranging from $34 to $41. The price target represents a valuation of 14.5 times the company’s expected 2025 adjusted EBITDA.
The firm’s analysts recently hosted Option Care Health Chief Executive Officer John Rademacher and Senior Vice President Nicole Maggio at the third annual Citizens Medical (TASE:BLWV) Devices and Healthcare Services (NASDAQ:HCSG) Forum, where they discussed the company’s outlook and strategy.
Citizens JMP identified Option Care Health as its "top idea" in healthcare services coverage, citing several factors supporting its positive outlook for the company. The firm highlighted the company’s "industry-leading scale" as a key competitive advantage in the healthcare services sector. This advantage is reflected in the company’s strong financial performance, with revenue growth of 17% and a healthy gross profit margin of 20% in the last twelve months.
The research firm expressed expectations for "continued share gains" and "longer-term SG&A leverage" as additional factors supporting its positive rating on Option Care Health. These operational improvements could potentially enhance the company’s profitability over time.
Citizens JMP also pointed to Option Care Health’s "strong cash flows" and "capital deployment optionality" as reasons for its optimistic view of the company’s prospects. The company has demonstrated this strength with significant share buybacks and a robust free cash flow yield of 7%. These financial strengths provide the company with flexibility for future investments or shareholder returns.
In other recent news, Option Care Health reported its first-quarter 2025 financial results, highlighting a robust performance with a 16% year-over-year increase in revenue to $1.33 billion, surpassing analyst expectations. The company’s earnings per share (EPS) also exceeded forecasts, coming in at $0.40 compared to the anticipated $0.33. UBS analyst AJ Rice upgraded Option Care Health’s stock from Neutral to Buy, raising the price target to $40.00, citing the strong earnings momentum despite challenges from the drug STELARA. Meanwhile, JMP Securities maintained a Market Outperform rating with a $36.00 price target, reflecting confidence in the company’s growth potential.
The revenue growth was largely driven by increases in both acute and chronic therapies, with the latter benefiting from strong performance in rare and limited distribution therapies. Gross profit rose 10% to $263.1 million, and adjusted EBITDA increased by 14% to $111.8 million, both surpassing analyst estimates. Analysts noted that Option Care Health’s strategic acquisitions and expansions, such as the opening of three new infusion clinics, are expected to bolster future growth.
Additionally, Option Care Health’s management anticipates that STELARA will pose a $60-70 million gross profit headwind for the full year. However, UBS highlighted the company’s potential to benefit from a healthcare shift towards home care, which could increase volumes. The company continues to focus on strategic partnerships and acquisitions to enhance its service offerings and market presence.
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