PGNY - I'm selling Progyny this week [June 24th] and this is why!
Progyny, Inc ( NASDAQ: PGNY ) shares have advanced more than 40% since the beginning of January 2021, and the current share price stands around $59. Progyny expects adjusted EBITDA between $70 million to $75 million for the 2021 fiscal year, but even this doesn’t justify its current stock price.
Fundamental analysis: Progyny raised its profitability guidance for 2021
Progyny is a company that specializes in fertility and family building benefits solutions for employers in the United States by the combination of clinical and emotional support. Progyny was founded in 2008, while the company went public in 2019 by selling 10 million shares at $13.00 per share.
Progyny shares have advanced more than 45% since March 2021 after the Bank of America has upgraded this stock to buy from neutral, noting an ‘attractive’ entry point.
Progyny reported its first-quarter results at the beginning of last month; total revenue has increased by 50.7% Y/Y to $122.13 million while GAAP EPS for the same period was $0.15 (beats by $0.09). It is important to say that medical revenue increased 50% compared to the first quarter last year to $88.9 million, while Pharmacy revenue increased 54% in the quarter to $33.3 million.
“For the full year, we continue to expect revenue of $520 million to $540 million, reflecting growth of between 51% and 57%. Given our strong start to the year, we are raising our profitability guidance for 2021, and we now expect between $70 million to $75 million for adjusted EBITDA,” said Mark Livingston, CFO of Progyny.
Progyny ended the first quarter with 179 clients (each with at least 1000 covered lives), reflecting a growth of approximately 30% in covered lives over the past year. The analyst Michael Cherny, from Bank of America, expects a further business acceleration in the next several years, but lots of positive expectations have already been included in the stock price.
Technically looking, Progyny shares could advance above the current price levels in July 2021, but the risk/reward ratio is not good enough for “value” investors. The company’s TTM EBITDA is still below $30 million, and if we compare the total stockholders’ equity of $184 million and the market capitalization of $5.65 billion, we can notice that this stock is not undervalued.
Technical analysis: $50 represents a strong support level
Progyny shares have been moving in an uptrend last several months, but lots of positive expectations have already been included in the stock price. The critical support level stands at $50, and if the price falls below this support, it would be a firm “sell” signal and probably a trend reversal sign.
Summary
Progyny shares have advanced more than 40% since the beginning of January 2021, and lots of positive expectations have already been included in the stock price. The current risk/reward ratio is not good enough for “value” investors, and if the price falls below $50 support, it would probably be a trend reversal sign.
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