Bank of America Securities analyst Allen Lutz maintained a Sell rating on Premier yesterday and set a price target of $21.00.
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Allen Lutz’s rating is based on a combination of factors that highlight both opportunities and challenges for Premier. While the potential acquisition by Patient Square Capital could indicate a strategic interest in Premier, the company’s shares have been underperforming for several years. Despite trading at a lower EBITDA multiple compared to its peers, such as drug distributors and Henry Schein, the market conditions remain challenging.
Premier’s recent performance has shown some positive trends, with expectations of increased revenue and earnings by FY27. However, the current valuation appears favorable only if there are near-term improvements, which are not anticipated. Concerns persist regarding the stability of revenue shareback rates and competitive pressures from peers like Vizient and HealthTrust. Additionally, the rise of regional and smaller group purchasing organizations adds uncertainty to Premier’s future rate trajectory. Given these factors, Allen Lutz maintains a cautious outlook, resulting in a Sell rating for Premier.