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On Thursday, Raymond (NSE:RYMD) James reiterated its positive stance on Phreesia Inc . (NYSE: NYSE:PHR), maintaining an Outperform rating and a $30.00 price target. The firm’s analysis suggests that Phreesia’s shares, currently trading at $25.45, reflect future free cash flow (FCF) expectations, with a focus on the company’s transition to a more FCF-oriented narrative due to its strategic approach to growth and profitability. InvestingPro data shows 4 analysts have revised their earnings upward for the upcoming period, with analyst targets ranging from $28 to $36.
Phreesia’s stock is trading at 15.1 times the forecasted FY27 FCF per share of $1.70 and 10.3 times the F2028 FCF per share estimate of $2.50. Raymond James’ $30 price target is based on an 11.5 times FCF multiple on the FY29 FCF per share estimate of $3.18, which is then discounted back two years at a 10% rate. This calculation aligns the valuation with what would be the calendar year 2026. The company, with a market capitalization of $1.48 billion, has demonstrated strong revenue growth of 17.83% over the last twelve months. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels.
The research firm highlighted Phreesia’s evolving narrative, shifting towards a focus on free cash flow. This shift is a result of the company’s more deliberate approach to balancing growth with profitability, which is expected to yield a higher conversion of earnings into cash flow.
According to Raymond James, the multiple applied to Phreesia’s future FCF is justified by the company’s strategic initiatives. The firm underscores the importance of the incremental flow-through of earnings to cash flow, which is seen as a positive development for Phreesia’s financial story.
The analysis by Raymond James provides investors with a long-term perspective on Phreesia’s valuation, looking ahead to the fiscal year 2029, which corresponds to roughly the calendar year 2028. The firm’s methodology involves discounting the estimated FCF per share back to present value terms to arrive at the current price target.
In summary, Raymond James’ reiteration of the Outperform rating and $30.00 price target on Phreesia Inc. reflects confidence in the company’s future cash flow generation and its strategic approach to growth and profitability. The firm’s valuation model emphasizes the increasing relevance of free cash flow in Phreesia’s financial narrative. InvestingPro analysis reveals the company maintains a moderate debt level with a healthy current ratio of 1.78, and analysts predict profitability this year. For deeper insights into Phreesia’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Phreesia Inc. reported its fourth-quarter fiscal year 2025 earnings, surpassing analysts’ expectations with an EPS of -$0.11 compared to the forecasted -$0.15. Revenue for the quarter was $109.7 million, slightly above the forecast of $108.92 million, marking a 15% year-over-year increase. Canaccord Genuity raised its price target for Phreesia shares to $35.00, up from $34.00, maintaining a Buy rating, citing durable revenue and improved cash flow. DA Davidson also reiterated a Buy rating with a $36.00 price target, highlighting Phreesia’s consistent performance and undervaluation compared to peers.
Phreesia achieved an adjusted EBITDA of $36.8 million for the year, marking the first positive adjusted EBITDA since FY’21. The company’s Gross Profit Margin on Subscription and Network revenue reached 80.6%, surpassing the 80% threshold for the first time. Phreesia’s platform is involved in approximately 14% of all U.S. doctor visits, offering a unique channel for patient engagement. The company aims for continued revenue growth and strategic acquisitions in fiscal year 2026, projecting revenue between $472 million and $482 million. Both Canaccord and DA Davidson express confidence in Phreesia’s growth trajectory and financial profile improvements.
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