Accolade Inc. (ACCD) Estimates Increase After 2nd.MD Acquisition Closes, Stifel Reiterates Buy
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Stifel analyst David Grossman reiterated a Buy rating and $54.00 price target on Accolade Inc. (NASDAQ: ACCD) after adjusting estimates for 2nd.MD, a previously announced acquisition. The acquired entity, 2nd.MD provides expert second opinion via live video telemedicine through a network of 900 specialists across a wide variety of specialties. They offer second opinions to members within 3-5 days via a televisit, substantially shortening the typical consultation period, which can range up to 35 days for an in-person consult. We still have more to learn, but at first glance, we find these businesses highly complementary and synergistic, enhancing the value proposition for each and creating significant cross selling opportunities in client bases with very little overlap.
The analyst stated "We are encouraged that management is looking beyond traditional boundaries to expand its value proposition/TAM by offering members access to highly-regarded specialists for second opinions. While 2nd.MD and related integration costs will meaningfully increase the EBITDA loss in FY22 (Feb), breakeven should still be achievable in FY24. ACCD has re-rated 35% off its December highs and trading at 8x FY23E (Feb) revenue, an attractive entry point. ACCD is growing 25%+ organically, despite economic/customer specific headwinds (employment, airlines, Comcast), which should all moderate going forward. Core growth is sustainable reflecting the increasing need for third-party healthcare navigation services as benefits/care are becoming more complex and the focus on cost increases. Our 12 month $54
TP is 11.5x FY23E revenue."
Shares of Accolade Inc. closed at $39.92 yesterday.
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