Astrana Health currently trades at $21.98 per share and has shown little upside over the past six months, posting a small loss of 1.5%. The stock also fell short of the S&P 500’s 9.8% gain during that period.
Given the weaker price action, is now a good time to buy ASTH? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Does Astrana Health Spark Debate?
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Astrana Health’s 33.3% annualized revenue growth over the last five years was incredible. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Astrana Health’s revenue to rise by 34.2%. While this projection is below its 47.7% annualized growth rate for the past two years, it is eye-popping and indicates the market sees success for its products and services.
One Reason to be Careful:
New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Astrana Health’s ROIC has decreased significantly over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.
Final Judgment
Astrana Health’s merits more than compensate for its flaws. With its shares lagging the market recently, the stock trades at 6.5× forward EV-to-EBITDA (or $21.98 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
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