Baird raises Phreesia stock price target following Q4 results
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On Monday, Baird, a global financial services firm, adjusted its price target for Phreesia Inc . (NYSE:), a healthcare software company, raising it to $31.00 from the previous $30.00. The firm also reiterated its Outperform rating on the company’s stock.
Phreesia’s fourth-quarter revenue reported a 24% year-over-year increase, which slightly surpassed expectations by 2%. The company experienced its fastest growth in Software-as-a-Service (SaaS), attributed to consistent client additions and an increase in revenue per client. Additionally, Phreesia’s Network Solutions segment was highlighted for its exceptional performance in the digital marketing space, with a promising forward pipeline.
The company also saw a significant improvement in its EBITDA losses, which were reduced to $4 million compared to a $18 million loss year-over-year. This figure was notably better than the consensus estimate, which projected a $7 million loss. Phreesia’s forward-looking statements for fiscal year 2025 included a reiteration of revenue projections ranging from $424-434 million, indicating a growth rate of 19-22%, which aligns with the consensus estimate of $428 million.
Moreover, Phreesia has raised its EBITDA expectations for FY25, now forecasting between $12-20 million, a stark improvement from the $35 million loss reported in the previous year. This revision also surpasses the consensus estimate of $13 million. The company’s strategy moving forward is to prioritize profitable revenue growth, which is expected to enhance client retention and cost of customer acquisition payback.
InvestingPro Insights
Following Baird’s optimistic adjustment to Phreesia Inc.’s (NYSE:PHR) price target and Outperform rating, InvestingPro data and tips provide additional context to the company’s financial landscape. With a market capitalization of $1.34 billion, Phreesia’s growth trajectory is underscored by a notable revenue growth of nearly 27% over the last twelve months as of Q4 2024, according to InvestingPro metrics.
Despite not yet being profitable, with an adjusted P/E ratio of -10.15 and an operating income margin of -38.3%, the company’s commitment to a strategy of profitable revenue growth is reflected in the recent upward earnings revisions by 3 analysts for the upcoming period, as per InvestingPro Tips. This analyst sentiment could be indicative of Phreesia’s potential to meet or exceed its financial targets in the near future.
Moreover, Phreesia’s gross profit margin stands at a strong 65.19%, a testament to the company’s ability to maintain profitability at the core operational level. While the company does not pay dividends, indicating a reinvestment of earnings back into growth and expansion, this could be appealing to growth-focused investors. The InvestingPro Fair Value estimate of $26.72 also suggests that the stock may have room to appreciate towards Baird’s $31.00 price target.
For investors seeking a deeper dive into Phreesia’s financials and future prospects, there are additional InvestingPro Tips available, which can guide investment decisions. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. The platform currently lists several more tips that delve into Phreesia’s operational and financial nuances.
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