ALIT - Health Catalyst gains as KeyBanc upgrades on improving hospital end markets

2023-04-20 07:39:56 ET

Health Catalyst ( NASDAQ: HCAT ), a software vendor to healthcare establishments, added ~5% pre-market Thursday after KeyBanc Capital Markets upgraded its shares to Overweight from Sector Weight to account for potential tailwinds from improving hospital systems end markets.

As Healthcare IT names prepare for Q1 2023 earnings season, the analyst Scott Schoenhaus picks Health Catalyst ( HCAT ), Alight, Inc. ( ALIT ), R1 RCM ( RCM ), and Progyny ( PGNY ) as the firm’s key ideas in the subsector.

Schoenhaus cites KeyBanc’s proprietary credit card data from approximately 1.8M card holders to note early signs of improvement in hospital end markets.

The analyst argues that this will favor Health Catalyst’s ( HCAT ) efforts to market its Data Operating System (DOS) for new customers and convert those who are currently using its DOS-Lite Platform, leading to consensus-beating topline growth at higher margins.

“We believe this should bode well for future DOS wins and conversions from customers who are currently using DOS-Lite Platform, which should ultimately drive topline growth above current consensus expectations at a higher margin profile,” Schoenhaus wrote.

With a $16 target on the stock, the analyst argues HCAT is attractively valued as shares trade at ~2.0x of the company’s next 12-month revenue.

Read: Seeking Alpha analyst Ryan Licwinko issued a Buy rating on Health Catalyst ( HCAT ) in March, citing strong market trends favoring the company.

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