Piper Sandler raises Claritev stock target to $19 from $10

On Monday, Piper Sandler analyst Jessica Tassan increased the price target on Claritev (NYSE:CTEV) shares to $19.00, up from the previous $10.00, while maintaining a Neutral rating on the stock. The new target sits slightly above the current trading price of $18.26, with InvestingPro data showing the stock has demonstrated significant volatility and a remarkable 90.21% gain over the past six months. Tassan’s adjustment reflects her assessment of the impact of recent healthcare regulations on the company’s revenue prospects.

Claritev reported weaker than expected fourth-quarter results for the year 2024 last week and provided guidance for the calendar year 2025 that fell short of market expectations. The analyst attributes the disappointing performance and outlook to the effects of the No Surprises Act (NSA) and increased price transparency on out-of-network (OON) claims repricing.

Despite the low stock price, Tassan noted that Claritev’s management has taken steps to restructure $4.5 billion in debt to better align with the company’s turnaround plan. This debt burden remains significant, with InvestingPro data showing a concerning current ratio of 0.82, indicating short-term obligations exceed liquid assets. The company reported an EBITDA of $531M but posted a substantial net loss of $1.65B in the last twelve months. She expressed concerns about the company’s fundamental outlook, suggesting that the regulatory environment could weaken the appeal and profitability of OON claims repricing, potentially leading to sustained pressure on PSAV revenue and risks to Claritev’s long-term targets for the calendar year 2030.

Tassan’s revised price target is based on an 8x multiple of the company’s estimated adjusted EBITDA for the calendar year 2026, an increase from the previous valuation which was based on the calendar year 2025 estimates. The analyst’s commentary indicates that the updated evaluation of the NSA, price transparency, and customer churn were key factors in maintaining the Neutral rating and adjusting the price target. For deeper insights into Claritev’s financial health and valuation metrics, including 11 additional ProTips and comprehensive analysis, investors can access the full Pro Research Report available on InvestingPro.

In other recent news, Claritev Corp reported mixed financial results for Q4 2024, with revenue reaching $232.1 million, contributing to an annual total of $930.6 million, a 3.2% decrease from the previous year. Despite this decline, the company is implementing a transformation program aimed at reducing operating costs by 10-15%. Claritev’s guidance for 2025 suggests a potential revenue decline of up to 2% or flat growth compared to 2024, with expectations for sequential revenue and EBITDA growth driven by high-growth segments like HST and Data/Decision Science.

Additionally, Citi analysts adjusted their outlook on Claritev, formerly known as Multiplan, increasing the stock price target to $21.00 while maintaining a Neutral rating. This revision follows the company’s recent fourth-quarter results and fiscal year 2025 guidance, which did not entirely meet expectations. Despite demonstrating double-digit growth in new HST/BTS products and securing a $34 million Total (EPA:TTEF) Contract Value client signing, analysts at Citi remain cautious, citing challenges in achieving mid-single-digit revenue growth and stability in margins.

In other developments, Claritev announced changes to its executive compensation arrangements. The amendments involve severance agreements for CEO Travis S. Dalton and CFO Douglas M. Garis, with specific conditions for termination and changes in control. The company’s 2025 annual awards for executive officers will include time-based restricted stock units and cash-settled RSUs with specific vesting schedules. These changes are part of Claritev’s efforts to align executive incentives with shareholder interests.

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