Investing.com -- RBC (TSX:RY) Capital Markets has downgraded OptimizeRx Corp (NASDAQ:OPRX) to "sector perform," reflecting a tempered outlook on the company's growth prospects.
RBC analysts cited challenges in the company's direct-to-consumer segment, particularly as clients transition to a self-service model that generates lower revenue but offers higher margins.
This shift, coupled with weaker bookings attributed to the timing of the Medicx acquisition in late 2023, is expected to dampen revenue growth through the first half of 2025.
OptimizeRx's updated revenue projections for 2025 have been revised downward to $94 million, reflecting a modest 2.7% growth compared to an earlier forecast of 11%.
This adjustment aligns with RBC's recalibrated EBITDA estimate, now at $10.4 million for 2025, reflecting subdued growth expectations. Consequently, RBC has also lowered its price target for the stock to $6 from $7.
The company's challenges in the DTC business are partly offset by growth in its healthcare provider-focused offerings.
OptimizeRx has seen progress in this segment, signing 22 Digital Advertising and Activation Platform deals in 2024, up from 24 deals in all of 2023.
However, this growth has not been sufficient to overcome the revenue shortfalls in the DTC segment.
As long as the legacy provider business does not show a more strong growth trajectory, RBC analysts expect the stock to remain range-bound.
In addition, investors are concerned about the recent leadership changes, including the resignation of CEO Will Febbo.
Shares of the digital health technology company were down 2.8% in pre-open trade at 08:27 ET (13:27 GMT).