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On Tuesday, Raymond (NSE:RYMD) James made adjustments to its financial outlook for RadNet (NASDAQ:RDNT), citing multiple factors impacting the company's performance. The firm reduced RadNet's price target from $90.00 to $85.00 but maintained an Outperform rating on the stock. Currently trading at $60.21, RadNet has seen a significant -8.82% decline over the past week, though InvestingPro data shows an impressive 58.44% return over the past year.
The stock's current analyst consensus remains strongly bullish, with price targets ranging from $80 to $100. Analysts at Raymond James reported that their channel checks, conducted by Kaufman Hall, indicate that fourth-quarter volumes were likely subdued due to the holiday scheduling. Additionally, they expect RadNet to front-load some investment spending into the fourth quarter of 2024 in anticipation of 2025.
The revised estimates for the fourth quarter of 2024 include a decrease in EBITDA by approximately $5 million to $72 million. This adjustment is part of a broader outlook that sees 2025 as a year of significant investment for RadNet.
According to InvestingPro analysis, RadNet maintains a healthy financial position with a current ratio of 2.16, indicating strong liquidity. The company's trailing twelve months EBITDA stands at $248.44 million, with revenue growing at 12.2% year-over-year. The company plans to expand its Deep Health sales team from 12 to over 20 people and increase its service team from 45 to over 80 personnel. Despite no reported impact from the Los Angeles fires in the first quarter, Raymond James has incorporated some potential effects into their analysis.
Looking ahead to 2026, Raymond James anticipates a recovery year for RadNet as the company's investment spending decreases and cost savings from the DeepHealth operating system start to materialize. With an overall Financial Health Score of "GOOD" from InvestingPro, which offers 13 additional valuable insights about RadNet's performance and prospects, investors can access comprehensive analysis through the Pro Research Report, available exclusively to subscribers. The company's next earnings report is scheduled for March 4, 2025, which could provide more clarity on its investment initiatives and growth trajectory.
The company has estimated potential savings of over $10 million, although it may take several years to fully realize these savings. The analysts also noted that there are multiple opportunities to increase EBITDA, including potential mergers and acquisitions and a quicker than expected ramp-up in the Digital Health division.
For the fiscal year 2024, Raymond James estimates RadNet's revenue at $1.800 billion with an adjusted EBITDA of $276 million, a decrease of $6 million from previous forecasts. For 2025, they anticipate revenue of $1.958 billion and an adjusted EBITDA of $298 million, a $5 million reduction. The 2026 projections remain unchanged, with revenue estimated at $2.088 billion and adjusted EBITDA at $328 million. These adjustments reflect a cautious but still positive long-term outlook for RadNet's financial health and growth potential.
In other recent news, RadNet reported a significant 14.7% year-over-year revenue growth for its third quarter, totaling $461.1 million, with an adjusted EBITDA increase of 27.2%, reaching $73.7 million. Despite these figures, the company's net income saw a decline to $3.2 million from $17.5 million due to one-time expenses. RadNet's strategic mergers and acquisitions were highlighted by Jefferies, who adjusted their price target for the company's shares to $80.
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