Cantor starts Health Catalyst at OW; PT $16

Cantor Fitzgerald launched coverage of Health Catalyst (NASDAQ:HCAT) with an “overweight” rating and price target of $16, representing a 2024 enterprise value/revenue multiple of 2.3 times. The stock closed at $14.03 on July 31.

The company is a leading provider of data and analytics technology and services to healthcare organizations.

“We see several underappreciated growth levers on the horizon that could enable Health Catalyst to achieve its long-term target of 20% revenue growth, compared with our current estimate of 12.6% growth estimated for 2024 and 11.4% for 2025,” writes analyst Sarah James.

In addition to adjusted EBITDA margin expansion to 6.1% guided for 2024 from 3% guided in 2023, guidance is for a 10% adjusted EBITDA margin in 2025 and 20% long term, “driven by a return of top-line growth, scale, and cost efficiencies that are already well underway,” she added.

She said the re-alignment of the company’s cost structure will lower G&A, driving margin expansion in 2023. “We also believe that R&D expense will decline in 2024 and 2025 as management normalizes spend after a large investment cycle.”