Evolent Health stock target raised to $13 at Citizens JMP

On Monday, Citizens JMP’s Constantine Davides updated the firm’s outlook on Evolent Health (NYSE:EVH), raising the price target to $13.00 from the previous $12.00. The Market Outperform rating for the company’s shares was reaffirmed. Currently trading at $10.43, the stock has seen a significant decline of nearly 69% over the past year, with analyst targets ranging from $12 to $47.21. Davides noted that Evolent Health has been trading at approximately 12 times the firm’s 2025 adjusted EBITDA estimate. Historically, over the last two years, the company’s shares have fluctuated between 9 and 20 times next twelve months (NTM) EBITDA, averaging around 14 times. According to InvestingPro data, the company’s current EV/EBITDA multiple stands at 21x, with last twelve months EBITDA of $95.1 million.

The analyst acknowledged that 2024 presented significant challenges for Evolent Health but expressed confidence in the management’s response. Davides believes that the steps taken by the company’s leadership have effectively shielded the business from external factors that are beyond its control. While InvestingPro analysis indicates the company is currently undervalued, it also highlights that short-term obligations exceed liquid assets, with a current ratio of 0.85. As a result, profit generation for Evolent Health is expected to be more predictable and sustainable moving forward compared to the situation at the beginning of 2024.

Evolent Health’s performance has been under scrutiny, especially considering the wide trading range of its shares in terms of EBITDA multiples. Despite these challenges, the updated price target suggests a sense of optimism about the company’s ability to navigate through difficulties and emerge with a stronger financial outlook.

The analyst’s comments reflect a belief in the resilience of Evolent Health’s business model and its management’s strategy. With the revised price target, investors may gain a renewed perspective on the company’s potential for growth and stability in the coming years. For deeper insights into Evolent Health’s valuation and prospects, InvestingPro subscribers can access comprehensive analysis, including 8 additional ProTips and a detailed Pro Research Report, part of our coverage of over 1,400 US stocks.

Evolent Health’s stock price movement will continue to be watched closely by investors, especially in light of this new price target and the company’s efforts to stabilize and grow its financial performance after a turbulent period.

In other recent news, Evolent Health reported fourth-quarter results that did not meet analyst expectations, posting an adjusted earnings per share of -$0.02 against the anticipated $0.07. The company’s revenue for the quarter was $646.5 million, falling short of the projected $652.2 million, though it represented a 16.3% increase year-over-year. For the full year 2024, Evolent achieved revenue of $2.55 billion, marking a 30.1% growth from 2023. However, Evolent’s guidance for 2025 disappointed, with projected revenue between $2.06 billion and $2.11 billion, significantly below the $2.42 billion analysts expected.

Piper Sandler adjusted its price target for Evolent Health to $16 from $17 but maintained an Overweight rating, indicating continued confidence in the company’s prospects. The adjustment followed Evolent’s earnings report, which Piper Sandler noted was at the lower end of the company’s revenue and adjusted EBITDA guidance. Despite this, Piper Sandler expressed optimism, citing Evolent’s strong bookings and full retention of top customers as positive indicators. Evolent’s forecast for 2025 includes an adjusted EBITDA of $150 million at the midpoint, which Piper Sandler considers well-judged amid rising oncology costs. Additionally, Evolent announced contract amendments expected to yield a $115 million annual improvement in net income and adjusted EBITDA for 2025.

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