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Investing.com - Health Catalyst Inc. (NASDAQ:HCAT) received a downgrade from Piper Sandler on Wednesday, with its rating cut from Overweight to Neutral and its price target slashed to $4.00 from $8.00. According to InvestingPro data, this follows a pattern where 4 analysts have recently revised their earnings estimates downward, though the stock appears undervalued based on Fair Value analysis.
The downgrade follows disappointing first-half 2025 bookings and a reduction in the company’s calendar year 2025 revenue guidance, attributed to lower net revenue retention, reduced in-year bookings to revenue conversions, and customer churn.
Piper Sandler noted that the revised 2025 guidance eliminates all organic growth from the outlook, with Health Catalyst now expecting calendar year 2026 revenue to decline year-over-year.
Despite these challenges, Health Catalyst management has affirmed its outstanding calendar year 2025 adjusted EBITDA guidance and committed to exiting the year at a $60.0 million annualized adjusted EBITDA run-rate.
The research firm’s new $4.00 price target represents a multiple of 10.0x calendar year 2026 estimated adjusted EBITDA, down from the previous 12.7x multiple, with analysts expecting the stock to remain range-bound around this level due to growth concerns.
In other recent news, Health Catalyst reported its Q2 2025 earnings, revealing a significant earnings per share (EPS) miss. The company reported an EPS of -$0.59, which was far below the forecast of $0.04, representing an earnings surprise of -1575%. Despite this, Health Catalyst managed a minor revenue beat, but the market’s reaction was negative due to the substantial EPS miss. Additionally, Wells Fargo has adjusted its outlook for Health Catalyst by lowering the price target from $10.00 to $6.00, while maintaining an Overweight rating. The adjustment was attributed to a shift in client preferences from bundled software to more affordable modular solutions. Wells Fargo noted that this trend is similar to consumer cable unbundling, where clients are saving money instead of reinvesting in additional applications. This revenue pressure is expected to persist through mid-2026. These developments highlight the challenges and shifts Health Catalyst is currently facing.
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