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On Monday, TD Cowen initiated coverage on Astrana Health, Inc. (NASDAQ: ASTH), assigning a Buy rating to the company's shares along with a price target of $66.00.
The firm highlighted the company's performance in a challenging value-based care market, noting Astrana Health's double-digit year-to-year revenue and EBITDA compounded annual growth rates (CAGRs). Additionally, the company has been recognized for its ability to generate positive free cash flow.
TD Cowen's coverage comes with a positive outlook on Astrana Health's future business strategies. The firm anticipates that Astrana Health will continue its trend of converting enrollees from partial to full risk. This refers to the company's ability to manage the financial risk associated with providing care, thereby potentially increasing its profitability.
The investment firm also sees potential in Astrana Health's ongoing acquisition strategy. Furthermore, TD Cowen expects Astrana Health to broaden its reach by moving into new geographies.
The price target of $66.00 set by TD Cowen is based on 18.4 times the firm's estimated 2025 EBITDA for Astrana Health.
In other recent news, Astrana Health has finalized its acquisition of multiple healthcare entities, including Collaborative Health Systems, Golden Triangle Physician Alliance, and Heritage Physician Networks. This strategic move is anticipated to fortify Astrana Health's portfolio in the healthcare management sector and broaden its client base. In the wake of this acquisition, Astrana Health has received positive attention from analysts.
BTIG maintained a Buy rating for the company, raising its price target from $60.00 to $70.00. Similarly, Baird maintained an Outperform rating, boosting Astrana's stock price target to $67 and projecting a 24% increase in Revenue and a 21% rise in adjusted EBITDA over a three-year compounded annual growth rate. Truist Securities and Stifel have also upgraded their outlooks for Astrana Health. Truist Securities shifted Astrana Health's stock rating from Hold to Buy and raised the price target to $50.00, while Stifel raised its price target for Astrana Health to $48, maintaining a Buy rating.
Furthermore, Astrana Health has initiated the process for the resale of Earn-Out Shares linked to its acquisition of Asian American Medical Group, enabling former AAMG stockholders to potentially sell shares upon meeting specified performance targets.
InvestingPro Insights
Astrana Health's recent performance aligns with TD Cowen's positive outlook. According to InvestingPro data, the company has demonstrated strong growth, with revenue increasing by 22.76% over the last twelve months as of Q2 2024, reaching $1.59 billion. This growth trend is even more pronounced in the most recent quarter, with revenue growth of 39.65% in Q2 2024.
InvestingPro Tips highlight that Astrana Health has been a strong performer, with a high return of 81.39% over the last year and a substantial 38.09% price increase over the past six months. These figures support TD Cowen's bullish stance on the stock.
The company's valuation metrics present an interesting picture. While it's trading at a high earnings multiple with a P/E ratio of 41.58, an InvestingPro Tip suggests that it's trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.89. This could indicate that the stock is potentially undervalued considering its growth prospects, aligning with TD Cowen's positive outlook and price target.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Astrana Health, providing a deeper understanding of the company's financial health and market position.
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