Evercore ISI initiates coverage on Omada Health stock with Outperform rating

Investing.com - Evercore ISI has initiated coverage on Omada Health Inc (NASDAQ:OMDA) with an Outperform rating and a price target of $21.00, according to a research note released Tuesday. The stock currently trades at $18.30, having surged over 16% in the past week, though InvestingPro data indicates the stock is currently in overbought territory.

The virtual healthcare provider currently serves more than 679,000 members and manages chronic conditions including pre-diabetes, diabetes, hypertension, and musculoskeletal disorders through its human-led, technology-enabled platform.

Omada Health has established a customer base exceeding 2,000 clients, targeting employers, health plans, pharmacy benefit managers, and health systems with an engagement-based billing model to drive adoption of its services.

Evercore ISI projects Omada can maintain approximately 20% annual growth by attracting new customers and increasing penetration within existing accounts, with the company having access to more than 20 million eligible lives currently.

The research firm expects Omada’s gross margins to expand to approximately 66% by 2027, providing what it calls "a comfortable base" for the company to scale operating expenses and achieve long-term EBITDA margin targets of 20-25%, up from more than 2% projected for 2027.

In other recent news, Omada Health has made its debut on the Nasdaq Global Select Market, with shares opening at $23, surpassing its initial public offering (IPO) price of $19 per share. The IPO included 7.9 million shares, with an option for underwriters to purchase an additional 1.185 million shares. Barclays (LON:BARC), Morgan Stanley (NYSE:MS), and JPMorgan have all initiated coverage on Omada Health with an Overweight rating, citing growth potential in the digital health sector. Barclays set a price target of $21, highlighting Omada’s market share gains and partnerships with major health plans like Cigna (NYSE:CI). Morgan Stanley set a price target of $25, noting the company’s focus on chronic care and its substantial customer base. JPMorgan set a price target of $20, projecting a 24% compound annual growth rate over the next three years. The firm also mentioned Omada’s partnership with CVS Caremark and its entry into the GLP-1 space. These developments reflect Omada Health’s strategic positioning in a large and minimally penetrated market.

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