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On Monday, Citi adjusted its outlook on Multiplan Co. (NYSE: MPLN), reducing the price target to $10.00 from the previous $17.20, while keeping a Neutral rating on the stock. The adjustment follows the company's 1-for-40 reverse stock split that took effect today.
The firm stated that the modification in the price target is a direct response to the reverse stock split, with the intention of aligning the model and target price accordingly. The recalibration of the target price to $10.00 is based on an approximate 8x multiple on the firm's forecasted FY25 adjusted EBITDA estimates.
Despite the change in the price target, the firm's overall estimates for Multiplan Co. remain unchanged, except for the per-share items which have been updated to reflect the reverse stock split. The reverse split is a corporate action intended to boost the share price by reducing the number of shares in circulation, which increases the value of the existing shares.
The new price target of $10.00 reflects the firm's current valuation of Multiplan Co. following the reverse stock split. This target is an assessment of the company's future financial performance, particularly focusing on the adjusted EBITDA for the fiscal year 2025.
The neutral stance by Citi indicates a balanced perspective on Multiplan's stock, suggesting that the firm does not see significant upside or downside potential at the current time. This rating implies that the stock is expected to perform in line with the market or sector averages.
In other recent news, Multiplan Corporation has been in the spotlight with Piper Sandler reducing its price target for the company. This follows Multiplan's second-quarter results for fiscal year 2024, which fell below consensus estimates, leading to a downward revision of the full-year guidance. The adjustment is attributed to a weaker-than-expected revenue yield in its core business and slow bookings for its HST/BST services.
The earnings report also revealed an expected $30 million challenge to revenue in fiscal year 2025 due to an attrition event. Despite these setbacks, Multiplan's long-term growth rate target of 8-10% remains unchanged, though delayed.
In other developments, Multiplan announced a change in its financial leadership, with Doug Garis succeeding Jim Head as the Chief Financial Officer. The company also reported a Q2 2024 revenue decrease of 1.9% year-over-year to $233.5 million, alongside an 8% increase in sales and double-digit growth in its pipeline.
As part of its strategic shift, Multiplan is transitioning towards a data and technology-focused approach, with new products Plan Optics and BenInsights successfully sold. The company also revised its full-year 2024 revenue guidance to between $935 million and $955 million.
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