Thursday, Baird increased the price target for Astrana Health, Inc (NASDAQ:ASTH) to $67 from $54 while maintaining an Outperform rating. The firm believes that the company, which they consider a top pick, is significantly undervalued and is on the verge of realizing substantial growth.
Astrana Health's potential for growth stems from the expected full-risk conversion of approximately 1 million members, which Baird estimates could lead to at least a 24% increase in Revenue and a 21% rise in adjusted EBITDA over a three-year compounded annual growth rate (CAGR), based solely on this factor.
The analyst highlights that with full claims delegation, Astrana Health has a clear insight into member profitability, which mitigates the risks associated with this growth opportunity.
According to Baird, Astrana Health is currently trading at roughly a 30% discount compared to its peer, Privia Health Group (PRVA), despite having nearly double the EBITDA. The firm suggests that Astrana Health's straightforward business narrative and the potential for increased growth make the company's stock an attractive investment opportunity.
The analyst's comments underscore the simplicity of Astrana Health's growth story and its capacity to leverage its understanding of member profitability. This strategic advantage is expected to help the company unlock greater growth, justifying the raised price target and the positive outlook on the stock's performance.
In other recent news, healthcare company Astrana Health has announced plans to acquire Collaborative Health Systems (CHS), a subsidiary of Centene (NYSE:CNC) Corporation. The acquisition, expected to be completed by the end of the year, is set to enhance Astrana's care delivery capabilities and strengthen its provider network.
CHS, which currently serves over 129,000 beneficiaries across 17 states, will extend Astrana's reach, particularly in key markets such as Connecticut, Georgia, Maryland, New Mexico, Virginia, and Texas.
In related developments, Astrana has initiated the process for the resale of Earn-Out Shares linked to its acquisition of Asian American Medical Group (AAMG). This move allows former AAMG stockholders to potentially sell shares they are entitled to upon meeting specified performance targets.
Financial firms Truist Securities and Stifel have recently upgraded their outlooks for Astrana. Truist Securities shifted Astrana Health's stock rating from Hold to Buy and raised the price target to $50.00, recognizing the company's strong performance and its ability to meet demand within the value-based care industry.
Similarly, Stifel raised its price target for Astrana Health to $48, maintaining a Buy rating, after meeting with the company's management. This decision was influenced by Astrana Health's expansion strategies beyond California and its robust merger and acquisition pipeline.
InvestingPro Insights
Amidst the positive outlook from Baird, Astrana Health, Inc (NASDAQ:ASTH) also presents several intriguing metrics and expert tips that could further interest investors. According to InvestingPro data, Astrana Health has a market capitalization of $2.29 billion and is trading with a P/E ratio of 31.71. This valuation comes at a time when the company's revenue has grown by 22.76% over the last twelve months as of Q2 2024, indicating a robust upward trajectory in earnings. Additionally, the company's stock has seen a year-to-date price total return of 21.62%, reflecting investor confidence.
InvestingPro Tips suggest that Astrana Health is trading at a low P/E ratio relative to near-term earnings growth, which could signal an undervalued stock poised for potential gains. Moreover, analysts predict the company will be profitable this year, a sentiment echoed by the company's profitable performance over the last twelve months. It's also noteworthy that Astrana Health operates with a moderate level of debt, which may offer some resilience against market volatility and financial stress.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available that delve into the company's financials and market performance (https://www.investing.com/pro/ASTH). These insights could provide a deeper understanding of the investment potential that Baird sees in Astrana Health, particularly when considering its growth prospects and strategic advantages in the healthcare sector.
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