Waystar's Modest FY25 Outlook Faces Growth Challenges: Goldman Sachs Analyst Weighs In

Goldman Sachs analyst Adam Hotchkiss reiterated the Buy rating on Waystar Holding Corp. WAY, with a price forecast of $52.

The analyst highlights that despite strong performance in 2024, the company’s stock has fallen 14% since its fourth-quarter earnings release, compared to a 6% drop in the S&P 500.

The decline reflects investor concerns over a modest increase in FY25 revenue guidance, which suggests a growth slowdown year over year, adds the analyst.

Also, Hotchkiss is concerned about the longevity of FY24 tailwinds, such as benefits from Change Healthcare and patient payments, as well as Waystar’s potential to exceed expectations in the coming year.

The analyst notes multiple expansion will depend on the scale of potential quarterly beat-and-raise trends in FY25, along with stronger cash flow generation and deleveraging as the company continues to reduce its net interest burden.

In a bull scenario, the analyst anticipates low double-digit growth in FY25, exceeding management’s ~7% guidance, with modest acceleration in FY26 driven by strong RFP activity from hospitals and health systems.

Key factors include stable gross retention, elevated healthcare utilization, and strong cross/upsell momentum, adds the analyst.

Hotchkiss says the new customer acquisitions could reach the top-end of estimates if Waystar capitalizes on high RFP volumes and expects margin expansion to remain limited due to patient payments revenue and an already lean cost structure.

Price Action: WAY shares are up 0.18% at $39.06 at the last check Tuesday.

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