ASTH: Future Full-Risk Conversions Will Unlock Underappreciated Medicare Advantage Upside

Astrana Health's analyst price target has been revised modestly lower, with fair value decreasing from approximately $42.38 to $40.25. Analysts are factoring in a slightly reduced future P/E multiple and near term uncertainty around full risk contract conversions, despite still underappreciated longer term Medicare Advantage upside.

Analyst Commentary

Street research reflects a mixed but generally constructive stance on Astrana Health, with modest target cuts framed against what is still viewed as a favorable multi year growth setup. Recent commentary highlights both the potential for meaningful upside from Medicare Advantage and the execution risks tied to full risk contract conversions.

Bullish Takeaways

• Bullish analysts see the current valuation embedding a conservative view of fiscal 2026 EBITDA, suggesting upside if management delivers even incremental progress on its full risk strategy.
• Upside from Medicare Advantage in 2026 is viewed as underappreciated in the share price, with investors yet to fully discount the earnings leverage from higher acuity, risk bearing lives.
• The lowered price targets still sit meaningfully above the current fair value estimate. This indicates confidence that medium term growth and margin expansion can re rate the multiple over time.
• Management’s roadmap for contract conversions in early 2026 provides a tangible catalyst path. Bullish analysts believe this can help rebuild confidence once early data points come through.

Bearish Takeaways

• Bearish analysts view the delays and uncertainty around full risk contract conversions as a material execution overhang. They see this as warranting a lower near term valuation multiple.
• Low conviction in the timing and magnitude of fiscal 2026 EBITDA has led to more cautious modeling assumptions, with limited credit given to management’s conversion targets until proof points emerge.
• Near term visibility into first half 2026 trends is considered insufficient. This raises the risk that further slippage in operational milestones could pressure both earnings estimates and the stock.
• Some analysts are concerned that investor confidence will only recover after clear evidence of successful risk transitions. They note this may cap multiple expansion in the interim, even if the long term Medicare Advantage thesis remains intact.

What's in the News

• Astrana Health updated its 2025 earnings guidance and now expects total revenue of $3,100 million to $3,180 million.

Valuation Changes

• Fair Value: reduced modestly from approximately $42.38 to $40.25, reflecting a slightly more conservative outlook.
• Discount Rate: edged down marginally from about 7.40 percent to 7.33 percent, implying a small decrease in perceived risk or required return.
• Revenue Growth: increased slightly from roughly 13.69 percent to 13.96 percent, indicating a modestly stronger top line outlook.
• Net Profit Margin: dipped marginally from around 1.49 percent to 1.48 percent, signaling a near unchanged, slightly lower profitability expectation.
• Future P/E: declined from approximately 41.28x to 39.13x, suggesting a slightly lower valuation multiple applied to Astrana Health's forward earnings.