Press Ganey Downgraded To Neutral By Goldman Sachs After One Year As A Buy

Press Ganey Holdings Inc PGND's share price has appreciated 38 percent over the past 12 months, significantly outperforming the sector.

Goldman Sachs’ Andre Benjamin downgraded the rating on the company from Buy to Neutral, with a price target of $39.

Risk-Reward Balanced

Benjamin mentioned that the risk/reward on the stock was more balanced, following the outperformance, although the total return potential of 4 percent was significantly less attractive than other Buy-rated stocks in the Goldman Sachs coverage universe.

“We believe the outperformance was driven by strong execution, with four consecutive “beat-and-raise” quarters while many healthcare IT and Info Services stocks posted misses,” the analyst went on to say.

The analyst also pointed out that Press Ganey continues to deliver on growth, according to the census-based survey, upselling to clients that are focused on improving the patient experience.

Aspects To Consider

According to the Goldman Sachs report, Press Ganey offers an “attractive offense/defense combo with growth mostly reflected in valuation.”

Benjamin believes that the company is an attractive combination of a three-year EBITDA CAGR of 13 percent, driven by continued penetration of digital surveys, launch of further regulatory surveys and margin expansion, based on accelerated operating leverage.

In addition, the company has no FX exposure, a robust balance sheet and 90 percent sales visibility.

Benjamin warned, however, that there was “limited room for growth forecasts or the multiple to materially expand based on the opportunities we know about today.”