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Investing.com - KeyBanc has reiterated its Overweight rating and $20.00 price target on Evolent Health (NYSE:EVH) following the company’s recent refinancing activities. With the stock currently trading at $9, this represents a potential 122% upside. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with all 6 analysts covering the stock recently revising their earnings estimates upward.
The investment firm noted that Evolent Health completed a $175 million exchange of its Series A Convertible Preferred Stock for a Second Lien Term Loan on August 7, 2025, pushing out significant debt maturities.
Evolent also issued $145 million of 4.5% Convertible Notes due 2031 this week, using the proceeds to retire its 1.5% Convertible Notes that were set to mature later in 2025.
KeyBanc expects Evolent’s debt leverage to temporarily increase in the second half of 2025, but anticipates it will return to the 4-4.5x range during 2026, with minimal dilution to cash flow.
The firm believes Evolent investors are currently focused on large deal announcements, cash generation, and steady EBITDA performance, with management’s post-second quarter commentary indicating favorable claims development with July close.
In other recent news, Evolent Health reported its second-quarter 2025 earnings, which fell short of expectations. The company announced an earnings per share (EPS) of -$0.10, missing the forecasted $0.08, resulting in a significant negative surprise of -225%. Additionally, revenue was reported at $444 million, below the anticipated $459.4 million, marking a surprise of -3.28%. In related developments, Evolent Health announced the pricing of $145 million in convertible senior notes at 4.50%, an increase from the initially planned $140 million offering. This offering includes a 30-day option for initial purchasers to acquire an additional $21.75 million of notes. These notes are being offered exclusively to qualified institutional buyers under Rule 144A of the Securities Act. The announcement followed a prior plan to offer $140 million in convertible senior notes with an option for an additional $20 million.
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