RBC Capital Markets has updated its outlook on TruBridge Inc (NASDAQ: TBRG), raising the price target to $14 from $13 while keeping an Outperform rating on the stock. The adjustment follows a late-filing notice from TruBridge, which the analyst believes is of little consequence to the company's long-term performance.
The filing delay, described as limited in scope, is expected to be resolved early this week, possibly even today, without necessitating any financial restatements or affecting profit and loss or cash flow.
TruBridge management has confirmed that the filing hiccup will not alter the fiscal year 2024 guidance, reassuring investors that over 90% of the revenue for the year is already under contract.
The results align with the key factors of RBC's Outperform thesis, which includes robust Revenue Cycle Management (RCM) bookings and an expanding presence offshore, alongside a stabilizing Electronic Health Record (EHR) business.
The price target increase reflects a positive outlook on TruBridge's fundamentals. The company's recent performance, especially in the second quarter, has shown progress in areas critical to its growth strategy.
The RCM segment, in particular, has been a strong point, with increased bookings indicating a healthy demand for TruBridge's services. Moreover, the company's efforts to grow its offshore operations suggest a strategic expansion to new markets.
TruBridge's stability in its EHR business is another aspect underlined by RBC. In a sector that is often subject to rapid changes and competition, a stable EHR offering can be a significant advantage. It provides a reliable foundation for the company's broader portfolio of health technology services.
Recently, Deutsche Bank has adjusted the price target from $12.00 to $11.00 but maintained a Hold rating on the stock. TruBridge has revised its total revenue forecast downwards from the initial range of $340 million - $350 million to a new range of $330 million - $340 million. The updated guidance is below the consensus estimate of $344 million and suggests a flat to 3% year-over-year growth.
In the second quarter, TruBridge's revenue guidance was set below the market expectation of $84.5 million, with a guidance midpoint of $82 million indicating a year-over-year decline of 3.1%. Despite this, the company reaffirmed its full-year adjusted EBITDA to be within the range of $45 million to $50 million, which aligns with the Street's projection of $46.3 million. The second-quarter adjusted EBITDA is expected to be between $8.0 million and $10.0 million, suggesting an improvement in profitability in the second half of the year.
InvestingPro Insights
As TruBridge Inc (NASDAQ: TBRG) navigates through its recent filing delay, the market is keeping a close eye on the company's financial health and growth trajectory. In light of the recent update from RBC Capital Markets, it's worth considering additional insights provided by InvestingPro. According to InvestingPro Data, TruBridge has a market cap of $180.28 million and has experienced significant returns over the past week, month, and three months, with figures standing at 27.12%, 18.18%, and 42.33% respectively. This suggests a strong short-term bullish trend in the stock's performance.
Furthermore, despite a slight revenue decline of 0.1% over the last twelve months as of Q2 2024, the company's gross profit margin remains robust at 48.7%, indicating efficient cost management relative to its revenue. While the company is trading at a high EBITDA valuation multiple and has not been profitable over the last twelve months, analysts are predicting profitability for the current year. This aligns with the positive sentiment expressed by RBC Capital Markets, as reflected in their raised price target.
TruBridge's progress and strategic initiatives, such as the robust RCM bookings and offshore expansion, are pivotal as the company aims for profitability. Investors and potential shareholders can find additional InvestingPro Tips, including the expectation of net income growth and analysts' predictions of profitability, on the dedicated InvestingPro page for TruBridge at https://www.investing.com/pro/TBRG. With over nine additional tips available, these insights can offer a deeper understanding of the company's potential and investment profile.
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