On Monday, JPMorgan (NYSE:JPM) took a cautious stance on agilon health Inc (NYSE:AGL), lowering its price target on the company's shares from $9.00 to $6.00, while maintaining a Neutral rating. The adjustment follows the release of agilon's fourth-quarter 2023 results and the revision of its financial guidance.
The firm updated its 2024 and 2025 revenue estimates for agilon to $6,406 million and $7,9374 million, respectively, a slight decrease from the previous projections of $6,394 million and $7,965 million. Additionally, the adjusted EBITDA estimates for the same years have been significantly revised to a loss of $42 million in 2024 and a gain of $60 million in 2025, compared to the earlier forecast of $41 million and $154 million, respectively.
The lowered price target is based on an approximate 0.3x enterprise value-to-sales multiple on agilon's projected 2025 revenue. This new target reflects the company's updated 2024 EBITDA guidance, which was substantially below the initial outlook provided in January and significantly missed the consensus estimates.
In January, agilon estimated its 2024 adjusted EBITDA to be around $50 million at the midpoint, against a consensus of $98 million. However, the company later revised this guidance to a midpoint of negative $37.5 million in February. Despite management's efforts to enhance claims visibility, the analyst expressed concern over the reliability of the company's guidance at this point.
The report from JPMorgan concludes by suggesting that agilon health is currently a "show-me" story, indicating that the company must demonstrate several consecutive quarters of reliable performance to regain investor confidence.
InvestingPro Insights
As agilon health Inc (NYSE:AGL) navigates through its financial revisions and investor concerns, the recent data from InvestingPro provides a deeper look into the company's performance and valuation. The company's market capitalization stands at $2.45 billion, which reflects the size and scale of the business in the healthcare sector.
One of the key metrics that stand out is the substantial revenue growth of 80.74% in the last twelve months as of Q4 2023, indicating a significant increase in the company's sales. This growth figure, however, should be contrasted with the company's gross profit margin, which remains low at 1.61%, suggesting that despite increasing sales, the cost of goods sold is high, impacting profitability.
The P/E ratio, a measure of the company's valuation, is currently at -9.22, and the adjusted P/E ratio for the same period is even lower at -12.58. These negative values are a testament to the company's current lack of profitability, which aligns with analysts' expectations that agilon will not be profitable this year.
InvestingPro Tips for agilon health highlight that the management has been aggressively buying back shares and holds more cash than debt on its balance sheet. Additionally, the company is trading at a low revenue valuation multiple and near its 52-week low, which could present a value opportunity for investors if the company's turnaround strategies take effect.
For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available on https://www.investing.com/pro/AGL. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 12 InvestingPro Tips that could further inform investment decisions regarding agilon health.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.