On Thursday, UBS initiated coverage on Option Care Health (NASDAQ:OPCH) stock, a provider of home and alternate site infusion services, with a Neutral rating and a price target of $26.00. The firm cited a mix of positive fundamental factors and uncertainties that could impact the company's financial performance in the near to intermediate term.
The analyst acknowledged the potential benefits for OPCH, including the trend towards at-home healthcare, a diversified drug portfolio, and opportunities for mergers and acquisitions in a fragmented market. These factors could provide tailwinds for the company's growth.
However, UBS expressed caution due to the uncertain financial implications of changes to STELARA, a significant specialty drug in OPCH's portfolio, expected in 2025. This uncertainty makes it difficult to fully endorse the company's ability to meet its growth targets.
UBS's revenue and adjusted EBITDA forecasts for 2025 are 6% and 1%, respectively, which fall below OPCH's own targeted growth algorithm. The company aims for high single-digit (HSD) top-line growth and low double-digit (LDD) EBITDA growth. Due to these factors, UBS anticipates OPCH's valuation to stay around 10 times EV/EBITDA going forward.
The $26.00 price target set by UBS reflects the firm's neutral stance on the stock, considering both the growth opportunities and the challenges ahead. This valuation is based on the expectation that the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) will remain relatively stable in the foreseeable future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.