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On Monday, Stifel analysts maintained a Hold rating on Health Catalyst Inc. (NASDAQ:HCAT) with a steady price target of $5.50. Currently trading at $4.10, the stock has shown significant volatility, with InvestingPro data showing an impressive 8.2% gain over the past week, despite a challenging six-month period that saw a decline of over 50%. The firm’s analysis comes after hosting CFO Jason Alger and VP of IR Jack Knight during the previous week at the Stifel CSI Conference. The discussion at the conference centered around Health Catalyst’s ambitious revenue growth and EBITDA targets for 2025, as well as the potential long-term growth from the shift to the Ignite platform. According to InvestingPro data, the company maintains a moderate debt level with a debt-to-equity ratio of 1.07 and has demonstrated revenue growth of 4.9% over the last twelve months.
Stifel acknowledged that while Health Catalyst’s financial targets for 2025 are within reach, there are considerable risks involved. The company’s projections hinge on the closure of certain late-stage deals in Health Information Exchange (HIE) and life sciences, which have been postponed due to complexities and uncertainties around Medicaid and government funding. Additionally, the closure of a few large data licensing deals, particularly those related to the Carevive acquisition, is expected in the fourth quarter.
The transition to the Technology-Enabled Services (TEMs) and some conversions to the DOS/Ignite platforms present further challenges for Health Catalyst. Stifel highlighted the need for the company to demonstrate that the new, lower-priced Ignite platform can broaden the Total (EPA:TTEF) Addressable Market (TAM) to include small to medium-sized health systems. Moreover, the platform should serve as a foundation for upselling over time, improving the Dollar-Based Retention (DBR) rate, which currently stands at 102%.
Despite the risks, Stifel noted that the market has already factored in many of these concerns, with Health Catalyst’s stock trading at approximately 6 times EBITDA. Based on InvestingPro’s comprehensive analysis, the stock appears undervalued at current levels, with analysts setting price targets ranging from $5 to $10. The company maintains a "GOOD" overall Financial Health score, suggesting resilience despite current challenges. For deeper insights into HCAT’s valuation and growth potential, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Health Catalyst Inc. reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.01, significantly above the forecasted $0.0027. The company also reported revenue of $79.41 million, slightly exceeding the $79.21 million forecast. Health Catalyst’s technology revenue grew by 10%, contributing to a 6% year-over-year increase in total revenue. Canaccord Genuity maintained a Buy rating for Health Catalyst, although it lowered the price target to $9, citing the company’s acquisition of 40 new platform clients and a net dollar retention rate of 103%. Evercore ISI adjusted its price target for Health Catalyst to $5, up from $4, while maintaining an ’In Line’ rating, noting the company’s efforts to expand its Total Addressable Market (TAM) through the Ignite platform. The Ignite platform launch has been pivotal, adding 10 new clients and expanding strategic partnerships with Microsoft (NASDAQ:MSFT) and Databricks. Health Catalyst also strengthened its balance sheet by paying off $230 million in convertible notes. These developments are part of Health Catalyst’s ongoing strategic shift and growth trajectory.
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