BofA double downgrades Agilon Health to Underperform on impaired visibility

BofA downgraded Agilon Health (AGL) to Underperform from Buy with a price target of $3, down from $10.50, citing a deteriorating environment for Medicare Advantage companies and “a slew of bad news in recent weeks.” 2024 margins have already come under pressure due to hotter than expected hospital volumes, while the federal government under the current Democratic administration appears to be cutting reimbursement even further through weaker star quality bonus payments across the industry, particularly for one of its largest clients, Humana (HUM), slated to hit 2026. These developments, which “are all entirely outside” of Agilon’s control, make it difficult for the firm to believe that the company can materially improve margins at a time when the industry is contracting, the analyst tells investors.