Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Wells Fargo (NYSE:WFC) has lowered its price target on Health Catalyst Inc. (NASDAQ:HCAT) to $6.00 from $10.00 while maintaining an Overweight rating, citing clients’ shift from bundled software to lower-priced modular solutions. The stock, currently trading at $2.83, sits near its 52-week low of $2.80, with InvestingPro data indicating the shares are undervalued based on Fair Value analysis.
The firm compared this trend to consumer cable unbundling, noting that healthcare clients are choosing to pocket savings rather than reinvest in additional applications as Wells Fargo had anticipated. This revenue pressure is expected to continue through mid-2026, though the company maintains a 5.55% revenue growth rate and 46% gross margin. Get deeper insights into Health Catalyst’s financial health with InvestingPro, which offers 8 additional exclusive ProTips.
Health Catalyst has reduced its new client growth target to 30 from 40 for the year, with average selling prices trending toward the lower end of the $300,000 to $700,000 range. The company has already signed 22 platform clients, leaving 8 remaining for the rest of 2025.
The healthcare technology firm announced a restructuring plan that includes a 9% workforce reduction and contract restructuring, expected to yield over $40 million in annualized savings. Wells Fargo anticipates partial benefits beginning in the third quarter of 2025.
The cost-cutting measures are projected to help Health Catalyst reach approximately 20% margins or $15 million in adjusted EBITDA by the fourth quarter, establishing a run rate that suggests approximately $60 million in adjusted EBITDA for the full year 2026.
In other recent news, Health Catalyst reported its Q2 2025 earnings, revealing a significant earnings per share (EPS) miss. The company posted an EPS of -$0.59, contrasting sharply with the forecasted $0.04. Despite this, Health Catalyst managed a minor revenue beat, though the earnings surprise was a notable -1575%. These developments have drawn attention from investors and analysts alike. The market’s reaction to the earnings results was negative, reflecting concerns over the company’s financial performance. Analysts are likely to scrutinize these results closely in their future assessments. This earnings report highlights the challenges Health Catalyst faces in meeting market expectations. Investors will be watching closely for any strategic changes or updates from the company.
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