Allen Lutz, an analyst from Bank of America Securities, reiterated the Sell rating on Premier (PINC – Research Report). The associated price target is $16.00.
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Allen Lutz’s rating is based on the observation that Premier is currently facing significant challenges in its business model, particularly due to increasing revenue fee share rates. These rising rates are expected to continue affecting the company’s earnings until FY26, as the blended rate is anticipated to climb from the low-60% range to the high-60% range. Although there is some growth in gross administrative fees, it is insufficient to counteract the pressure on net administrative fees, which remains a major obstacle for the company’s earnings outlook.
Furthermore, Allen Lutz notes that the Performance Services segment is still struggling, with no clear indication of when it might recover in terms of growth and margins. The company’s revenue and EBITDA estimates for FY25 and beyond have been revised downward due to these ongoing challenges. While there might be potential for improvement through share repurchases or strategic mergers and acquisitions, the lack of visibility into a resolution of the fee share rate issue suggests continued difficulties. As a result, the price objective has been reduced from $19 to $16, reflecting these concerns.
Lutz covers the Healthcare sector, focusing on stocks such as Hims & Hers Health, Cardinal Health, and DENTSPLY SIRONA. According to TipRanks, Lutz has an average return of 10.9% and a 67.43% success rate on recommended stocks.