RadNet ( NASDAQ: RDNT ) was upgraded at Raymond James to Outperform from Market perform, on the heels of the company's Q4 results.
The firm also set a $30 price target on RDNT.
The SA Quant Rating on RDNT is Hold . The rating is in contrast to the average Wall Street Analysts' Rating of Buy .
Analyst John Ransom noted that the results showed a core business which is supported by "structural tailwinds," that it is heading EBITDA growth in the mid-single digits to high-single digits, according to a Bloomberg note.
There is an "improved strategic visibility, with peak losses behind us," and the valuation "leaves ample room for upside if the stock can earn a reputation of a dependable compounder," Ransom added.
The company's Q4 Adjusted EBITDA Including Losses from AI Segment and Provider Relief funding rose +10.7% Y/Y (+7.0% versus Raymond James).
In addition, the company outlook for 2023 included, an expected Adjusted EBITDA of $211M to $219M including AI losses of -$9M to -$11M, or $215M at the midpoint, $3M ahead of Street expectations, the analyst noted.
The analyst noted that SS volumes which were up +3.6%, near the high end of the company's 2%to 4% bogey, led the the top-line beat, while ameliorating labor pressure drove the +180 basis point sequential improvement in Adjusted EBITDA margins.
In particular, RadNet noted they experienced $30M of incremental labor costs in 2022, which should move to about $17M in incremental costs for 2023, according to the analyst.
RadNet also began to roll out its Enhanced Breast Cancer Detection program to its east coast markets in Q4 after a successful pilot in November, which fueled the inflection of losses in the AI segment, the analyst added.
RDNT +4.58% to $24.90 premarket March 3
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RadNet stock rises as Raymond James upgrades after Q4 results