On Friday, JMP Securities updated its outlook on Option Care Health (NASDAQ:OPCH), increasing the price target to $35 from the previous $30, while retaining a Market Outperform rating for the company’s stock. The adjustment reflects a shift in the firm’s valuation methodology, which now applies a 14x multiple to the company’s projected 2025 EBITDA, up from the 12x multiple used previously. According to InvestingPro data, the company currently trades at an EV/EBITDA multiple of 15.31x, with a market capitalization of $5.1 billion.
The analyst at JMP Securities cited the resolution of the Stelara overhang and the absence of significant single-product risk beyond Stelara as key reasons for the revised price target. The analyst’s optimistic stance is supported by the belief that the company’s diversified product portfolio reduces its exposure to risks associated with reliance on a single product. InvestingPro analysis shows the company maintains a GREAT financial health score of 3.46, with strong revenue growth of 13.6% in the last twelve months.
Option Care Health’s stock recently traded at approximately 13.2 times JMP Securities’ EBITDA estimate for 2024, which underlines the firm’s confidence in the company’s valuation and future performance. The new price target suggests that the analyst sees potential for continued growth in the stock’s value. InvestingPro subscribers have access to additional valuable insights, including 6 more ProTips and a comprehensive Pro Research Report that provides deep-dive analysis of the company’s fundamentals and growth prospects.
The company’s financial health and market performance have been closely monitored by analysts, with the EBITDA multiple serving as a common metric for assessing a company’s valuation. JMP Securities’ decision to raise the multiple used in their valuation indicates a positive outlook on Option Care Health’s earnings potential and market position.
Investors and market watchers alike will be observing how the updated price target might influence Option Care Health’s stock performance in the upcoming trading sessions. The increase to a $35 price target represents a notable endorsement of the company’s strategy and market prospects by JMP Securities.
In other recent news, Option Care Health has seen a series of significant developments. Jefferies and BofA Securities have upgraded the company’s stock to Buy, with Jefferies setting a new price target at $35.00 and BofA raising the target by 27%. These upgrades came after the company’s management provided a 2025 EBITDA forecast that surpassed Wall Street’s expectations, despite a potential financial headwind from Stelara. The company also announced the completion of a $90 million share repurchase and the approval of a new $500 million stock repurchase program.
However, other analysts have expressed concerns about potential financial impacts due to pricing adjustments for Stelara. UBS initiated coverage with a neutral rating, Goldman Sachs downgraded the stock from Buy to Neutral, and Truist Securities lowered its price target to $34, maintaining a Buy rating.
Option Care Health also released its preliminary financial results for Q4 and the full year of 2024, projecting a significant increase in net revenue and net income. For 2025, the company expects net revenue to reach between $5.2 billion and $5.4 billion, with adjusted EBITDA expected to be in the range of $445 million to $465 million. These projections consider the anticipated negative impact of $60 million to $70 million due to Stelara pricing adjustments.
These are recent developments that investors should consider when evaluating Option Care Health’s performance and prospects.
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