Leerink Partners upgrades Progyny stock rating to Outperform on improved membership activity

Investing.com - Leerink Partners upgraded Progyny (NASDAQ:PGNY) from Market Perform to Outperform on Tuesday, maintaining a price target of $28.00, which represents approximately 9x CY26 EV/EBITDA. The company, which maintains a "GREAT" financial health score according to InvestingPro, currently trades at an EV/EBITDA multiple of 22.5x.

The upgrade follows Progyny’s second positive preannouncement in six months, which Leerink Partners views as a signal that membership activity has rebounded from last year’s lows. The research firm had been cautiously optimistic after first-quarter results but needed additional data before taking a more constructive stance. This optimism aligns with broader analyst sentiment, as multiple analysts have recently revised their earnings expectations upward.

Leerink Partners notes that utilization appears to have stabilized and is showing signs of improvement, though some aspects of the company’s growth algorithm still need clarification, including the pace of new customer decision-making and the contribution from Amazon (NASDAQ:AMZN) employees to quarterly results. The company has demonstrated solid performance with revenue growth of 9.5% and a gross profit margin of 22% in the last twelve months.Discover more valuable insights about Progyny and access 12 additional InvestingPro tips, including detailed valuation metrics and growth indicators.

The research firm believes Progyny’s guidance philosophy has been conservative in 2025, potentially offering upside for the year. Pipeline conversions, which were described as slightly delayed during the first-quarter earnings call, remain necessary to support the company’s longer-term growth profile.

With stable utilization trends and what Leerink Partners describes as an undemanding valuation of approximately 7x CY26 EV/EBITDA estimates and roughly 9% free cash flow yield, the firm sees more potential for upside than downside despite pipeline risks. According to InvestingPro data, the company currently maintains a strong balance sheet with more cash than debt and a healthy current ratio of 2.39.

In other recent news, Progyny announced that its second-quarter financial results are expected to surpass previously provided guidance, with revenue, adjusted net income, and adjusted EBITDA slightly exceeding earlier projections. The company had initially forecasted revenue between $310 million and $325 million, with EBITDA estimates ranging from $49 million to $53 million. In a strategic financial move, Progyny has secured a $200 million revolving credit facility maturing on July 1, 2030, although it remains undrawn with no immediate plans for use. Analyst firms BofA Securities and BTIG have reiterated their Buy ratings on Progyny, both maintaining a $30.00 price target, citing favorable second-quarter performance and strong business momentum.

Additionally, Progyny is expanding its women’s health services by incorporating pelvic floor therapy into its offerings. This expansion is facilitated through partnerships with Origin and Hinge Health, providing both in-person and virtual care options. In leadership news, Progyny has appointed Elizabeth Bierbower to its Board of Directors, bringing her extensive healthcare sector experience to the company. Bierbower’s addition is seen as a strategic move to bolster Progyny’s growth and innovation efforts. These developments reflect Progyny’s ongoing commitment to enhancing its financial profile and expanding its health solutions portfolio.

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