On Monday, JPMorgan adjusted its outlook on Alignment Healthcare Inc (NASDAQ:ALHC), reducing the price target to $9 from the previous $11 while retaining a Neutral stance on the stock. The firm's decision comes after revising the adjusted EBITDA forecasts for the years 2024 and 2025.
The new estimates are set at a negative $4.4 million for 2024 and a positive $25.3 million for 2025, a change from the earlier projections of $0.0 million and $32.3 million, respectively.
The revised price target is based on an approximately 0.5x enterprise value to sales (EV/Sales) multiple. JPMorgan's analysis suggests a decrease in the target multiple, citing persistent concerns around potential Medicare Advantage utilization pressure, which may continue to affect valuation sentiments in the near term for the sector.
Alignment Healthcare's updated financial outlook reflects an adjustment due to the anticipation of challenges in the Medicare Advantage market. According to JPMorgan, these challenges are expected to exert a downward pressure on the valuations of companies operating in this space.
The adjustment in the price target and EBITDA estimates by JPMorgan indicates a cautious approach towards Alignment Healthcare's financial performance in the coming years. The firm's neutral rating suggests a wait-and-see approach, as future market conditions and company performance could influence the stock's movement.
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