HUM - Alignment Healthcare gains as Raymond James upgrades on valuation
2023-05-01 09:30:35 ET
- Manage care player Alignment Healthcare ( NASDAQ: ALHC ) rose ~6% pre-market Monday after Raymond James upgraded the stock to Outperform from Market Perform citing a favorable risk-reward setup following the recent selloff.
- The analyst John Ransom argues that ALHC and its managed care rivals have come under pressure this year amid policy setbacks and concerns over utilization recovery.
- This year, the U.S. Centers for Medicare & Medicaid Services (CMS) trimmed 2024 payment rates for Medicare Advantage companies, and Alignment Healthcare ( ALHC ) was among the notable gainers in March when finalized rates came ahead of expectations.
- “…However, we believe ALHC now offers a favorable risk/reward profile,” Ransom wrote, with a $9 price target on the stock.
- The analyst attributes his decision to “the clearing of recent policy overhangs” and a conservatively estimated 90.9% medical loss ratio for Q1 2023 due to positive remarks from Humana ( HUM ) about Medicare inpatient trends.
- Ransom also points out that Alignment Healthcare’s ( ALHC ) current valuation does not give credit to certain factors, such as the value of its DCE lives and statutory cash.
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Alignment Healthcare gains as Raymond James upgrades on valuation