On Wednesday, Benchmark has adjusted its outlook on Nutex Health (NASDAQ: NUTX) shares, lowering its price target from $6.00 to $5.00, while retaining a Buy rating on the stock.
The revision follows Nutex Health's first-quarter performance, which showed a 20% increase in revenue and a 5.3% rise in same-facility visits. The company's Adjusted EBITDA saw a significant year-over-year increase of 88%, reaching $4.6 million.
The analyst from Benchmark highlighted Nutex Health's robust net operating cash flow and positive future outlook, including an expected improvement in patient revenue per visit.
This is anticipated as the company expands hospital services and leverages the No Surprise Act to negotiate better terms.
Additionally, the recent strong enrollment figures in the fourth quarter of 2023 for the Independent Physician Associations (IPAs) in Texas and Florida are set to contribute positively to the company's performance.
Despite the planned openings of four new facilities being delayed into the next year to conserve cash, Nutex Health's financial position appears stable with $30 million in cash reserves, bolstered by $10 million from January's equity financing. This measured approach to new developments is seen as a strategic move to ensure sustainable growth.
The analyst expressed confidence in Nutex Health's potential for double-digit revenue growth and margin expansion in the years 2024 and 2025.
The current valuation of the company at 1.9 times its 2024 enterprise value to EBITDA ratio is perceived as undervalued, attributed to past challenges such as the Covid pandemic, the No Surprise Act, equity issuances, and a reverse stock split.
InvestingPro Insights
As Nutex Health (NASDAQ: NUTX) navigates its growth trajectory, recent data from InvestingPro provides a nuanced view of the company's financial landscape. Despite a positive revenue uptick in the first quarter, Nutex Health operates with a significant debt burden, and analysts do not anticipate profitability this year. The stock's recent performance reflects a significant return over the last week, with a 9.74% price total return, and a strong return over the last month at 33.11%. However, the broader picture shows a price that has fallen significantly over the last year, with a -91.4% one-year price total return, highlighting the volatility and challenges faced.
The company's market cap stands at a modest $34.74M, and while revenue growth is impressive at 31.69% for the last twelve months as of Q1 2024, the P/E ratio is negative at -0.66, underscoring the earnings challenges. InvestingPro Tips suggest that the stock is trading at a high EBITDA valuation multiple, which investors might consider when evaluating the company's current market position. For those seeking more in-depth analysis, InvestingPro offers additional tips for Nutex Health at https://www.investing.com/pro/NUTX. Interested readers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 13 InvestingPro Tips that could further inform investment decisions.
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