This Analyst Lowers Phreesia's Price Target Despite Projecting "Plenty Of Opportunity For Upside" - Read Why

Needham analyst Ryan MacDonald reiterated the Buy rating on Phreesia, Inc. PHR, lowering the price target to $29 from $40.

The company's 3Q24 earnings report signaled an increased focus on returning to positive adj. EBITDA and a more balanced approach to growth and profitability.

MacDonald said he is "supportive" of this change as the push-out of the $500 million revenue run-rate target in FY25 and improved adj. EBITDA outlook removes an overhang on the stock.

However, the analyst lowered the PT to more accurately reflect a valuation multiple for a profitable business growing 20%+; the analyst sees plenty of opportunity for upside in the shares and remains a buyer of PHR. 

The analyst said he is "bullish" on the opportunity for cross-selling recently acquired modules to drive subscription growth and views the LT monetization opportunity for PAM as attractive.

Looking ahead to FY25, increased focus on delivering a better balance of growth and profitability is expected to continue as Phreesia now expects FY25 adjusted EBITDA to be in the range of $10 million- $20 million, well above management's prior commentary to reach profitability in FY25 and well ahead of consensus adj. EBITDA expectations of ($17.2 million).

The analyst expects FY24 EPS of $(2.38) compared with the previous projection of $(2.48).

Price Action: PHR shares are trading higher by 20.5% to $17.78 on the last check Wednesday.