On Wednesday, RBC Capital Markets upgraded Phreesia Inc . (NYSE:PHR) stock, a leading healthcare software company, from Sector Perform to Outperform, with a new price target set at $32.00, up from the previous $24.00. The stock, currently trading at $26.98, has shown strong momentum with a 33.56% gain over the past six months. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period.
The upgrade reflects the analysts increased confidence in Phreesia's long-term EBITDA (earnings before interest, taxes, depreciation, and amortization) prospects, citing a clearer path to improved revenue per client while maintaining a stable cost base.
RBC noted that although Phreesia's consolidated revenue growth may see a modest deceleration from its current 19.91% year-over-year rate, the operating leverage built into the company's business model and management's commitment to cost discipline are expected to significantly expand margins.
While the company reported negative EBITDA in the last twelve months, InvestingPro analysis reveals multiple positive indicators suggesting a potential turnaround. Subscribers can access over 10 additional ProTips and detailed financial metrics for deeper insights.
This financial discipline and margin expansion are key factors that could enable Phreesia to rejoin the so-called "Rule-of-40" club, which refers to companies achieving combined growth and profit margins of at least 40%.
The analyst emphasized that the main catalyst for Phreesia's stock in the near term would be the company's continued success in increasing revenue per client. The raised price target to $32 from $24 reflects the potential for Phreesia to capitalize on these strategic initiatives and deliver on its financial goals.
Phreesia Inc. specializes in patient intake management solutions for healthcare providers, offering a platform that streamlines the check-in process and enhances the patient experience. The company's technology also provides valuable data and insights to healthcare organizations, helping them to optimize operations and financial performance.
The upgraded rating and price target from RBC Capital Markets suggest a positive outlook for Phreesia's stock, as the company continues to navigate the competitive healthcare technology landscape. Investors may watch for Phreesia's future earnings reports and operational updates to gauge the effectiveness of its strategies and its progress toward achieving the expected financial metrics.
With analysts projecting profitability this year and the next earnings report scheduled for March 26, 2025, InvestingPro subscribers can access comprehensive research reports and real-time financial metrics to make informed investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.