Raymond James Upgrades Alignment Healthcare Inc (ALHC) to Strong Buy, 'Following Removal of Star Ratings Overhang'

Raymond James analyst John Ransom upgraded Alignment Healthcare Inc (NASDAQ: ALHC) from Outperform to Strong Buy with a price target of $10.00 (from $9.00).

The analyst comments "We are upgrading ALHC to a Strong Buy and raising our price target to $10 (+$1) following the 2024 Star Ratings release (here). The company’s legacy H3815 plan, with ~90% of its membership, retained its 4.0-star status despite fears it would drop below the 3.5-star threshold, potentially leaving it to face a ~$70M headwind. Our upgrade is predicated on 1) the removal of the Star Ratings overhang, which has hampered sentiment (pre-Stars EV/2025E revenue of 0.4x) and held the stock rangebound since 2Q; 2) an implied 2H MLR that suggests the company continues to control its members’ costs, that now seems achievable after UNH’s commentary on recently stable utilization; 3) a renewed focus on growth in existing markets, which should support cost-efficient membership expansion, aiding the company in reaching profitability, an achievement looked at favorably in current market conditions and 4) a valuation (0.4x 2025E revenue) that fails to appreciate ALHC’s contined outsized growth vs. its peers, enabled by its tech stack, which we view as a key differentiator."

For an analyst ratings summary and ratings history on Alignment Healthcare Inc click here. For more ratings news on Alignment Healthcare Inc click here.

Shares of Alignment Healthcare Inc closed at $6.62 yesterday.

You May Also Be Interested In

• Berenberg Upgrades Sixt SE (SIX2:GR) to Buy
• HSBC Upgrades Blue Star Limited (BLSTR:IN) to Buy
• KeyBanc Upgrades Acadia Realty Trust (AKR) to Overweight