KeyBanc Starts Inovalon Holdings (INOV) at Overweight

KeyBanc initiated coverage on Inovalon Holdings (NASDAQ: INOV) with an Overweight rating and a price target of $26. Analyst Donald Hooker expects strong organic growth, and he expects the company to remain highly profitable and well positioned to pursue accretive acquisitions.

"INOV has accumulated one of the largest longitudinal databases of medical and patient data in the United States, including primary ("identified") data on 130M unique patients. This is complemented with significant in-house domain expertise and a fully modernized technology platform. All together, this allows INOV to provide its health plan, provider and biopharmaceutical clients with data-driven predictive insights into the progression of diseases at an individual, member-specific level across broad and diverse populations," sad Hooker.

"Looking ahead, we model revenues of $518M in 2016 (12% organic growth) and $600M in 2017 (16% growth) driven by the increasing prevalence of capitated and valuebased reimbursement models. Our 2016 growth estimate reflects a one-time ~460 bps headwind from the shutting down of more than a dozen government co-ops that were formed as part of the healthcare reform legislation of 2010. Otherwise, we believe INOV can continue to gain share, particularly following the announcement by competitor Verisk Analytics in late 2015 that it is evaluating “strategic alternatives” for its healthcare unit. Also, the recent acquisition of Avalere Health appears to be opening up new growth channels for INOV in the provider and biopharmaceutical spaces," added the analyst.

For an analyst ratings summary and ratings history on Inovalon Holdings click here. For more ratings news on Inovalon Holdings click here.

Shares of Inovalon Holdings closed at $18.68 yesterday.

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