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On Friday, Piper Sandler adjusted the price target for Evolent Health (NYSE:EVH) shares, reducing it to $16 from the previous $17 while continuing to endorse the stock with an Overweight rating. Currently trading at $10.71 with a market capitalization of $1.22 billion, InvestingPro analysis suggests the stock is trading below its Fair Value. The revision followed Evolent Health’s fourth-quarter 2024 earnings report, which, according to Piper Sandler, landed at the lower end of the company’s revenue and adjusted EBITDA guidance. Despite this, the results were perceived as better than anticipated.
Evolent Health’s outlook for the calendar year 2025 suggests an adjusted EBITDA of $150 million at the midpoint, building upon their current EBITDA of $104.3 million. The company has demonstrated strong revenue growth of 30% in the past year. Analysts at Piper Sandler believe this forecast is well-judged, particularly in light of the accelerated oncology cost trends observed in the final quarter of 2024. The company’s performance, including strong bookings and the full retention of its top customers—who account for 90% of its revenue—affirms the ongoing value proposition of Evolent Health.
Piper Sandler expressed confidence in Evolent Health’s prospects, encouraging the purchase of shares amid any potential market weakness observed on Friday. InvestingPro data reveals several key insights, including expectations for net income growth and future profitability. The firm’s analysts pointed out the company’s enduring value proposition as a key reason for their positive stance. The price target adjustment to $16 from $17 is based on an unchanged 15x multiple of the forecasted lighter calendar year 2025 adjusted EBITDA.
Evolent Health’s recent earnings report and the subsequent price target adjustment reflect the company’s current financial health and future expectations. The Overweight rating indicates that Piper Sandler remains optimistic about the stock’s performance in the market. Despite the slight reduction in the price target, the investment firm’s outlook for Evolent Health suggests that it still holds potential for investors looking for opportunities in the healthcare sector. For a deeper understanding of Evolent Health’s potential, InvestingPro subscribers can access the comprehensive Pro Research Report, which provides detailed analysis and additional valuable insights about the company’s prospects.
In other recent news, Evolent Health reported its fourth-quarter results, which did not meet analyst expectations. The company posted an adjusted earnings per share of -$0.02, falling short of the consensus estimate of $0.07. Revenue for the quarter was $646.5 million, slightly below the expected $652.2 million, although it marked a 16.3% increase year-over-year. For the full year 2024, Evolent’s revenue reached $2.55 billion, reflecting a 30.1% growth from 2023. However, the company’s revenue guidance for 2025, projected between $2.06 billion and $2.11 billion, was significantly lower than analysts’ expectations of $2.42 billion.
Despite the disappointing outlook, Evolent noted contract amendments in its Performance Suite negotiations, which are anticipated to improve annual net income and adjusted EBITDA by $115 million in 2025. The company also maintained a 100% partner contract retention rate with its top customers, who account for over 90% of its 2024 revenue. Additionally, Evolent announced two new revenue agreements during the quarter. Looking ahead to Q1 2025, Evolent expects revenue to range between $440 million and $470 million, with adjusted EBITDA projected between $31 million and $37 million.
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