Jefferies starts Waystar at Buy, says risk-reward is 'skewed to the upside'

February 12, 2025 01:23 AM AEDT | By Investing

Google News:

Jefferies starts Waystar at Buy, says risk-reward is 'skewed to the upside'

Recent News

ASX 200 Slips as Labour Data and US Rate Decision Shape Market

Berenberg initiates coverage of these two mid-cap U.K. names

Energy Sector Leads Market Turnaround on ASX 300 Index

CBA Leads ASX 200 Surge Amid Global Flows and Index Focus

Investing.com -- Jefferies initiated research coverage of Waystar Holding Corp (NASDAQ:WAY) stock on Tuesday with a Buy rating and a price target of $51.

With Waystar’s strong positioning in the payments ecosystem, Jefferies analysts believe that the consensus forecasts for the company are too conservative, particularly for fiscal year 2025, which currently projects only a 7.5% revenue growth and no margin expansion for the next several years.

“With shares trading at a ~20% discount to software peers, we believe the risk/reward is skewed to the upside at current valuation,” analysts led by Glen Santangelo said in a note.

Waystar offers a cloud-based revenue cycle management platform that integrates with existing technology and electronic health records platforms. This integration capability has driven growth as providers shift away from in-house solutions.

“We believe there's high interest in a capable platform that can integrate with a provider’s existing IT stack, which positions the company for a multi-year runway of low double-digit (LDD) growth and gradual margin expansion,” analysts continued

Currently, the key debates surrounding Waystar's stock include the sustainability of its LDD revenue growth, the timing of margin leverage in the financial model, and the company's valuation.

In this context, Jefferies sees Waystar as well-positioned to deliver consistent revenue growth, supported by strong net revenue retention rates, natural healthcare volume growth, and significant upsell opportunities.

On valuation, despite Waystar's shares increasing by more than 35% since early December and approximately 93% since its initial public offering in June, analysts consider the current levels attractive.

They note that Waystar is trading at roughly 20 times the firm's above-consensus estimates for calendar year 2025 EBITDA, compared to software peers trading at approximately 25 times.

The $51 price target is based on a 24 times multiple of projected calendar year 2025 EBITDA, assuming the discount to software peers narrows as the market begins to reflect the business more accurately.

Like Jefferies, other Wall Street analysts are also bullish on WAY stock, with 11 buy ratings, no neutral ratings, and no sell ratings.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.