On Monday, Apollo Medical Holdings (NASDAQ:AMEH) received a positive outlook from Jefferies, which initiated coverage on the healthcare service provider with a Buy rating and set a share price target of $50.00.
The firm highlighted Apollo Medical's diversified payer mix and consistent performance in value-based care as key factors for the optimistic stance.
According to the analyst, Apollo Medical is a significantly underappreciated and robust operator within the high-growth sector of healthcare services. The company's forecasted EBITDA growth of over 20% and its solid free cash flow generation were cited as reasons why the stock might attract increased attention in the next 12 to 24 months, potentially narrowing the valuation gap with its more popular industry counterparts.
The analyst also noted Apollo Medical's distinctive business model, which includes some payer functions, as an advantage. This aspect of their operations is believed to provide Apollo Medical with better visibility on cost trends compared to other value-based care (VBC) players. Addressing cost trend visibility is currently considered a critical issue in the healthcare services sector.
Apollo Medical Holdings' stock will be watched closely by investors as the market responds to Jefferies' coverage initiation and the potential for the company to close the valuation gap with its peers in the healthcare industry.
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