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On Wednesday, Truist Securities reaffirmed its Hold rating on Agilon Health Inc (NYSE:AGL) shares, which currently trades at $3.54 after seeing a significant 66.8% year-to-date gain. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, despite three analysts recently revising their earnings expectations downward. The firm’s analyst adjusted the company’s future revenue and earnings projections, citing a refined financial model. For the fiscal years 2025 and 2026, Truist now expects Agilon Health to generate revenues of $5.9 billion and $6.2 billion, respectively. These figures represent a decrease from the previous forecasts of $6.3 billion for FY25 and $6.8 billion for FY26.
The updated model also reflects changes in the adjusted EBITDA estimates for the same periods. The firm anticipates an adjusted EBITDA loss of $86 million in 2025, which is a decline from the previously estimated loss of $65 million. For 2026, the adjusted EBITDA is expected to be a loss of $49 million, contrasting with the earlier projection of an $18 million gain. These projections align with current performance metrics from InvestingPro, which show an EBITDA loss of $259.5 million in the last twelve months and a concerning gross profit margin of just 0.08%.
Truist’s analysis includes an expectation of approximately $301 million in medical margin for 2025, with roughly two-thirds generated in the first half of the year. The firm also anticipates general and administrative expenses to remain stable. Looking ahead to 2026, the analyst projects an addition of around 30,000 lives as part of the Class of 2026 and a 100 basis points improvement in the medical loss ratio (MLR) year-over-year. This MLR improvement is expected to drive approximately a 23% year-over-year growth in medical margin.
The adjustments made by Truist Securities reflect revised expectations for Agilon Health’s financial performance in the upcoming years. The Hold rating indicates that the firm does not currently see the stock as outperforming the market or its sector but also does not foresee significant underperformance. Investors holding Agilon Health shares are being advised of the updated financial outlook as per the firm’s latest analysis. With an overall Financial Health score of ’FAIR’ and more cash than debt on its balance sheet, InvestingPro subscribers can access 5 additional ProTips and a comprehensive Pro Research Report for deeper insights into the company’s prospects.
In other recent news, Agilon Health reported its fourth-quarter 2024 earnings, showing a 44% increase in revenue year-over-year to $1.52 billion, surpassing forecasts. However, the company experienced a larger-than-expected earnings loss with an EPS of -$0.26, missing the anticipated -$0.22. This mixed financial performance comes as the company is in a transition phase, focusing on profitability over growth for 2025. Agilon Health plans to reduce its Medicare Part D exposure to 30% of its population to mitigate risk, while also adding 20,000 new members through new partnerships. Benchmark analysts have raised the stock’s price target to $4, maintaining a Buy rating, and Stifel analysts have increased their target to $3, keeping a Hold rating. Both firms noted strategic shifts and positive revenue guidance as influential factors. Agilon Health is also renegotiating payer contracts to reduce exposure to Medicare Part D and improve quality incentives. Despite these challenges, the company aims to achieve cash flow break-even by 2027, with optimistic signs for the fiscal year 2026.
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