Analyst Upgrades This Radiology Stock, Expects Promising 2023 Ahead

  • Raymond James upgraded Radnet Inc RDNT from Market Perform to Outperform and a price target of $30 following 4Q22 results that came in ahead of expectations.
  • The management noted they experienced $30 million in incremental labor costs in 2022, which should move to roughly $17 million in incremental costs for 2023.
  • Management provided incremental color on the AI segment, with the Enhanced Breast Cancer Detection (EBCD) program expected to generate most of the segment’s 2023 revenue. 
  • The analyst writes that the upgrade is predicated on the following: 
    • A core business supported by structural tailwinds, driving MSD-HSD EBITDA growth as labor pressures ease.
    • The shedding of the AI overhang as there is now improved strategic visibility.
    • A reasonable valuation (8.3x 2024E EBITDA) leaves ample room for upside if the stock can earn a reputation of a dependable compounder.
  • The analyst writes that with labor and reimbursement headwinds easing, investors are expected to grow increasingly comfortable with the name given a favorable demand backdrop, solid core business, and AI segment gaining momentum.
  • Price Action: RDNT shares are trading 4.72% higher at $23.81 on the last check Friday.
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Posted In: Analyst ColorEarningsNewsUpgradesHealth CareSmall CapAnalyst RatingsMoversTrading IdeasGeneralBriefs
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