UPDATE: Cantor Fitzgerald Starts Oak Street Health (OSH) at Overweight
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Cantor Fitzgerald analyst Steven Halper initiates coverage on Oak Street Health (NYSE: OSH) with a Overweight rating and a price target of $75.00.
The analyst commented, "Oak Street is an at-risk operator of primary care centers for Medicare beneficiaries. The company contracts with Medicare Advantage plans and is paid a per member per month (PMPM) fee. The company is responsible for all downstream patient costs from healthcare services through prescription drugs and uses its Canopy technology platform to deliver data insights at the point of care and enable cross-team collaboration. We view Oak Street as a perfect example of how healthcare providers can use technology to thrive in a value-based reimbursement environment. Based on our estimates for center and patient growth in the next two years, we expect strong revenue growth. We note that it takes almost 6 years for centers to reach run rate margins. New center openings are a drag on margins and cash flow. That being said, we expect Oak Street to reduce its losses in 2022 and turn cash flow positive in 2023. As it executes on its growth strategies, we expect valuation levels to increase from current levels."
Shares of Oak Street Health closed at $58.55 yesterday.
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