Accolade's Financial Forecast: Anticipating Raised Guidance and Robust Revenue Growth

Needham analyst Ryan MacDonald reiterated a Buy rating on the shares of Accolade, Inc. ACCD with a price target of $15.

Accolade will release fiscal first quarter 2024 financial results on Thursday, June 29, 2023, after the market closes.

The analyst sees the demand for navigation solutions to remain robust, with several vendors citing record selling seasons.

Given management’s focus on margin expansion, ACCD is positioned to take a share in the navigation market, with tremendous upside on the profitability side.

Based on past results and new LT targets, MacDonald expects ACCD to outperform quarterly adj. EBITDA expectations.

Given the above, the analyst expects the company’s revenues in the quarter to be reported to be $99 million, versus the consensus of $90.3 million. The analyst expects EPS of ($0.38) 

For FY24, the analyst predicts Accolade to raise guidance above consensus, particularly for adj. EBITDA, as the company works towards its FY25 targets.

At Accolade’s investor day, the company increased its FY25 margin target while setting a longer-term target for $1B+ in revenue in FY29, notes the analyst.

Management expects to achieve its targets via improvements across the opex line items, with FY24 product & technology expenses to account for 17% of total revenue, down from 21% in FY23.

Overall, the analyst expects virtual primary care and the adoption of more trusted partner ecosystem apps will drive incremental leverage in the model in the near term.

In the long term, the company will gain from scaling gov’t business. 

Price Action: ACCD shares are trading lower by 2.96% to $12.29 on the last check Monday.