Phreesia’s Resilient Growth and Profitability Support Buy Rating Despite Revenue Noise

Canaccord Genuity analyst Richard Close has maintained their bullish stance on PHR stock, giving a Buy rating yesterday.

Richard Close’s rating is based on Phreesia’s demonstrated ability to maintain strong growth and profitability despite some revenue noise in the first quarter. The company’s model has shown resilience, with a respectable 14% year-over-year growth in subscription and services revenue, even after accounting for a one-time benefit. Although Network Solutions revenue growth was slightly below expectations, this was attributed to timing issues rather than a decline in demand.
Phreesia’s profitability has significantly improved, with adjusted EBITDA rising by 408% to $20.8 million, surpassing estimates. The company has effectively leveraged past investments, leading to improved margins and positive cash flow in recent quarters. Additionally, the increase in revenue per average healthcare services client suggests that Phreesia is on track to achieve its growth targets. These factors contribute to the belief that Phreesia’s stock is undervalued and poised for further growth, supporting the Buy rating.

In another report released yesterday, Citi also maintained a Buy rating on the stock with a $33.00 price target.

Based on the recent corporate insider activity of 163 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PHR in relation to earlier this year.