Rising Demand For Women's Health Will Transform Market Opportunity

Key Takeaways

• Expanding employer focus on women's health and demographic shifts drive robust, recurring demand and client growth for Progyny's fertility benefits and services.
  
• Integrated health platform investments and successful upselling boost revenue diversity, client retention, and margin growth while reducing risk from industry concentration.
  
• Cost pressures, competition, client concentration, higher investments, and regulatory risks could constrain revenue growth, margins, and profitability across Progyny's core and emerging business lines.

Catalysts

A benefits management company, provides fertility, family building, and women’s health benefits solutions in the United States.

• Sustained high levels of employer interest in women's health and family-building benefits-supported by a recent national study and 81% of HR leaders prioritizing these services-point toward robust long-term demand, especially as employers seek to attract and retain talent. This broadening acceptance and adoption are likely to expand revenue and topline growth over time.
  
• The continued shift in demographics-specifically delayed family formation and rising maternal age-supports an expanding addressable market for fertility benefits. This trend should drive increased client acquisition and member utilization, fueling growth in covered lives and recurring revenue.
  
• Investment in an integrated women's health platform (including new services such as pelvic floor therapy, leave navigation, and enhanced digital engagement) positions Progyny to cross-sell adjacent products, resulting in higher share of wallet with current clients and additional revenue streams, supporting both topline and margin expansion.
  
• Positive momentum in client retention and upselling, with renewals featuring either sustained or expanded benefits even in a cautious macro environment, enhances revenue predictability and underpins steady earnings growth.
  
• Strong inflows in new client pipeline-including a diverse client base across industries and increasing early launches-demonstrate resilience and lower exposure to sector-specific downturns, supporting stable earnings and reducing risk to future revenue streams.

Progyny Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Progyny's revenue will grow by 8.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.3% today to 7.0% in 3 years time.
• Analysts expect earnings to reach $112.6 million (and earnings per share of $1.28) by about August 2028, up from $53.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $133.2 million in earnings, and the most bearish expecting $78.8 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.2x on those 2028 earnings, down from 37.3x today. This future PE is greater than the current PE for the US Healthcare industry at 21.0x.
• Analysts expect the number of shares outstanding to decline by 4.76% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Progyny Future Earnings Per Share Growth

Risks

• Broad-based cost containment efforts and benefit prioritization by employers, especially in uncertain macroeconomic environments, may limit the uptake or expansion of premium fertility, maternity, and women's health benefits, which could constrain growth in revenue and client acquisition.
  
• Increased competition from both direct fertility benefit startups and large health insurers offering integrated fertility solutions may erode Progyny's differentiated value proposition, compressing margins and slowing member growth, ultimately pressuring revenue and EBITDA expansion.
  
• Overreliance on high-utilization industries (e.g., technology, healthcare, media) for higher expected revenue per client, alongside cyclical employment or demographic shifts within these industries, could expose Progyny to material demand risk, impacting predictability and stability of future revenues.
  
• Ongoing investments in new product development, integration of recent acquisitions, and expansion of services may drive up operating and capital expenditures ahead of corresponding revenue realization, leading to potential pressure on net income and adjusted EBITDA margins in coming years.
  
• Heightened political, regulatory, and legislative scrutiny or potential restrictions on reproductive health, ART procedures, or employer-sponsored fertility benefits could limit the future addressable market and add compliance costs, negatively impacting both revenue growth and long-term profitability.

Valuation

• The analysts have a consensus price target of $27.75 for Progyny based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $32.0, and the most bearish reporting a price target of just $21.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.6 billion, earnings will come to $112.6 million, and it would be trading on a PE ratio of 22.2x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of $23.06, the analyst price target of $27.75 is 16.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.