Phreesia Inc’s PHR stock is a way for investors to gain exposure to growing health care consumerism in the United States, according to KeyBanc Capital Markets.
The Analyst
KeyBanc’s Donald Hooker initiated coverage of Phreesia with an Overweight rating and a price target of $36.
The Thesis
Phreesia targets a total addressable market of around $7 billion and seems poised to sustain growth in the 20% range over the next several years, Hooker said in the note.
He mentioned that the company had generated more than 25% growth over the past three years, but this rate could decelerate due to tough comparisons.
Despite the slowdown, Phreesia may sustain around 20% growth, driven by “significant economies of scale to the bottom line,” Hooker wrote. He added that such drivers were visible at other SaaS and payment processing companies, like Shopify Inc SHOP, Square Inc SQ and Litespeed POS.
The analyst pointed out that Phreesia had a recent win at Lafayette General, which gives “incremental confidence” in the company being able to compete for health systems that use one of the major EHR (electronic health record) software vendors.
Competition from EHR software vendors like Cerner Corporation CERN may emerge in the mid- to long-term, but this would unlikely impact Phreesia’s near-term growth prospects, Hooker added.
Price Action
Shares of Phreesia were down 0.71% ti $30.98 at time of publication.
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