HCAT: Ongoing Customer Relationships Will Drive Performance Amid Lower Revenue Guidance

Analysts have lowered their price target for Health Catalyst from $8 to $4. They cite recent reductions in revenue guidance, as well as expectations for lower growth and profitability.

Analyst Commentary

Analyst assessments for Health Catalyst reflect mixed sentiment, with most focus centering on the company's updated guidance and the trajectory of organic growth. The revised outlook has prompted a more cautious stance from research firms following disappointing bookings and lower expectations for the near term.

Bullish Takeaways

• Bullish analysts note that the recent price target reduction may already reflect much of the negative outlook. This could limit further downside risk in the share price.
• They highlight Health Catalyst's existing customer base and its established market presence as potential sources of stability as the company navigates the more challenging revenue environment.
• Some see opportunities for eventual rebound if management can address churn and stabilize net revenue retention. This could lay foundations for improved long-term execution.

Bearish Takeaways

• Bearish analysts emphasize the complete removal of organic growth from the company's 2025 guidance. This raises questions about the sustainability of future revenue streams.
• The expectation of year-over-year revenue declines in 2026 is seen as a significant headwind for valuation and shareholder returns.
• Ongoing churn and lower net revenue retention have increased uncertainty around management's ability to deliver profitable growth and stabilize performance.
• Given these pressures, shares are expected to remain range bound, with limited upside potential until clearer signs of operational improvement emerge.

What's in the News

• Announced earnings guidance for the fourth quarter and full year 2025, with expected total revenue of approximately $73.5 million for Q4 and $310 million for the year (Key Developments).
• Entered a new partnership with CyncHealth Nebraska to enhance secure and standardized health data exchange. The collaboration aims to support the delivery of more accurate Continuity of Care Documents across healthcare providers (Key Developments).
• Launched Upfront by Health Catalyst's Market Insights on Salesforce AppExchange. This solution enables healthcare enterprises to use actionable consumer insights to improve patient engagement and implement targeted campaigns within existing Salesforce workflows (Key Developments).

Valuation Changes

• Fair Value Estimate has decreased from $4.56 to $3.94. This reflects a more cautious valuation based on recent business trends.
• Discount Rate has risen from 9.63% to 10.54%, which indicates higher perceived risk in the company's outlook.
• Revenue Growth Expectation has fallen notably, moving from 44.2% to 31.0% as forecasts are revised downward.
• Net Profit Margin projection has decreased from 8.77% to 7.70%, suggesting slightly lower expected profitability in future periods.
• Future Price-to-Earnings (P/E) Ratio has edged up marginally from 18.39x to 18.65x. This implies little change in market expectations for earnings multiples.