UBS analyst A.J. Rice upgraded the rating on Option Care Health (OPCH – Research Report) to a Buy yesterday, setting a price target of $40.00.
A.J. Rice has given his Buy rating due to a combination of factors that highlight Option Care Health’s strong financial performance and strategic positioning. The company demonstrated robust earnings momentum in the first quarter, even with the anticipated impact from STELARA being less severe than expected, thanks to effective inventory management. Looking ahead, STELARA’s integration into the company’s earnings is expected to support long-term growth, particularly as the healthcare industry shifts more care from institutional settings to the home, benefiting OPCH’s diversified drug portfolio.
Additionally, OPCH’s solid balance sheet and free cash flow generation position it well for strategic acquisitions in a fragmented market. The stock’s current valuation, at a discount compared to its historical average, presents an attractive entry point for investors. As the company continues to capitalize on shifts in care settings and expands its drug pipeline, its valuation is expected to align more closely with historical norms. Furthermore, OPCH is poised to manage potential tariff impacts through strategic contracts and inventory management, mitigating risks associated with cost inflation.
In another report released today, JMP Securities also reiterated a Buy rating on the stock with a $36.00 price target.
OPCH’s price has also changed slightly for the past six months – from $30.500 to $30.690, which is a 0.62% increase.