On Wednesday, Baird, a financial services firm, adjusted its price target for Phreesia Inc . (NYSE:PHR), a healthcare software company, bringing it down to $30.00 from the previous $34.00. Despite this change, the firm maintained its Outperform rating on the stock.
According to InvestingPro data, analyst targets for PHR range from $24 to $36, with the stock currently trading at $24.14, suggesting potential upside. The stock has shown strong momentum with a 14% gain in the past week.
The adjustment follows Phreesia's announcement of year-over-year revenue growth at 17%, which met expectations, and an improvement in EBITDA margins to 9% from a negative 7% the previous year, surpassing the consensus of 8%. InvestingPro data shows the company maintains a strong financial health score, with revenue growing at nearly 20% over the last twelve months and a healthy current ratio of 1.74.
The analyst from Baird highlighted Phreesia's continued focus on profitability, noting a positive shift in the financial outlook for fiscal year 2025 ending in January. The company's EBITDA projections have been raised, while revenue forecasts have been tightened, aligning with estimates.
For fiscal year 2026, Phreesia is expected to see a revenue increase of 13-15% year-over-year, which is slightly below the 1% consensus. However, the EBITDA forecast is significantly higher than anticipated, suggesting margins of 17% compared to 8% in the previous year, well above the consensus of 12%.
In absolute terms, the EBITDA for fiscal year 2026 is projected to be between $78 million and $88 million, which notably exceeds the consensus estimate of $60 million. The analyst expressed optimism about the stock's potential, citing a valuation of 17 times EV/EBITDA as very reasonable given Phreesia's growth and margin profile.
InvestingPro subscribers have access to additional valuation metrics and 6 more exclusive ProTips that provide deeper insights into PHR's investment potential, including detailed profitability forecasts showing analysts expect the company to turn profitable this year. This financial metric is a common valuation tool used to compare the value of a company, including debt, to its cash earnings less non-cash expenses. It's an indicator of how attractive the company may be as an investment opportunity.
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