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Investing.com - Citizens lowered its price target on Option Care Health (NASDAQ:OPCH) to $36.00 from $38.00 on Thursday, while maintaining a Market Outperform rating on the healthcare services provider. The new target still represents significant upside from the current price of $26.21, aligning with InvestingPro data showing analysts have set targets ranging from $30 to $41, with OPCH appearing undervalued according to Fair Value estimates.
The research firm highlighted Option Care Health’s strong cash flow position, noting management continues to target operating cash flow of at least $320 million in 2025. Citizens now expects free cash flow generation of $286 million in 2025, with initial capital expenditure assumptions proving conservative. This projection aligns with the company’s recent performance, as InvestingPro data shows Option Care generated $241.16 million in levered free cash flow over the last twelve months, contributing to its solid 5% free cash flow yield.
Option Care Health deployed $62.5 million toward share buybacks in the third quarter, bringing its year-to-date total to $215 million. The company finished the third quarter with a net debt to annualized EBITDA ratio of 1.8x, positioning it well for capital deployment. InvestingPro identifies "management has been aggressively buying back shares" as a key strength, with the company maintaining a healthy debt-to-equity ratio of 0.9 despite these repurchases. InvestingPro’s comprehensive Research Report on OPCH provides deeper insights into the company’s capital allocation strategy among 1,400+ top US stocks.
Citizens believes Option Care Health remains well positioned to allocate capital toward tuck-in acquisitions, internal investments, and its own stock. The firm noted other infusion assets are trading at roughly double Option Care Health’s current valuation.
The research firm suggested Option Care Health should capitalize on this valuation dislocation by prioritizing share buybacks more aggressively, using repurchase levels across the fourth quarter of 2024 and first quarter of 2025 as a baseline.
In other recent news, Option Care Health reported its third-quarter earnings for 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.45, exceeding the forecasted $0.43. Additionally, Option Care Health reported revenues of $1.44 billion, surpassing the anticipated $1.41 billion. Despite these positive earnings and revenue results, the company’s stock experienced a decline. These developments are part of the recent updates concerning Option Care Health.
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