Analyst Steve Baxter of Wells Fargo maintained a Buy rating on Agilon Health (AGL – Research Report), retaining the price target of $8.00.
Steve Baxter has given his Buy rating due to a combination of factors surrounding Agilon Health’s performance and prospects. Despite the negative prior year development (PYD) affecting first-quarter results, Agilon Health has been able to reiterate its 2024 guidance, indicating a level of underlying confidence in its business model. This reiteration is supported by the fact that recent payer negotiations have provided some relief on medical expenses. Moreover, the core cost trend in the first quarter was slightly more favorable than Agilon Health had planned, which suggests that the company is managing its costs effectively.
Furthermore, Baxter’s unchanged price target of $8 is underpinned by a balanced valuation approach, weighing both enterprise value to EBITDA and discounted cash flow methods. The enterprise value to EBITDA approach alone supports the $8 valuation based on a multiple of 15 times the estimated 2026 adjusted EBITDA. While adjustments to the model were necessary post-Q1 results, including a slight decrease in medical margin estimates and adjusted EBITDA, out-year estimates remain relatively stable, which indicates potential for steady growth moving forward. Baxter’s analysis, therefore, reflects an optimistic outlook on Agilon Health’s financial health and market position.
In another report released yesterday, JMP Securities also maintained a Buy rating on the stock with a $8.00 price target.
AGL’s price has also changed dramatically for the past six months – from $12.720 to $5.190, which is a -59.20% drop .
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Agilon Health (AGL) Company Description:
Agilon Health Inc is transforming healthcare by empowering community-based physicians with the resources and expertise they need to innovate the payment and delivery of care for seniors. The company enables physicians to create their own Medicare-centric globally capitated line of business.
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