Bank of America Securities analyst Joanna Gajuk reiterated a Sell rating on Agilon Health (AGL – Research Report) today and set a price target of $2.40.
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Joanna Gajuk’s rating is based on a combination of factors that highlight concerns about Agilon Health’s financial outlook and operational challenges. Despite some positive developments, such as better-than-expected EBITDA performance, the company faces ongoing issues with its Medical Loss Ratio (MLR) and Prior Period Development (PPD), which have negatively impacted results. The skepticism around the long-term margin structure of the business and the aggressive nature of the guidance for the second half of 2025 contribute to the cautious outlook.
Moreover, while Agilon Health is making strides in clinical and incentive structures, cost trends remain high, particularly with Part D expenses. The company’s efforts to mitigate these costs through negotiations and program rollouts are acknowledged, but the financial breakeven target set for 2027 still relies on several strategic levers. These include slowing growth to focus on profitability, managing risks associated with new members, and enhancing clinical strategies. The current cash flow situation, with expectations of not being cash flow positive until 2027, further supports the Sell rating, as the price objective remains significantly below the current stock price.