Morgan Stanley analyst Craig Hettenbach has maintained their bullish stance on LFST stock, giving a Buy rating on May 7.
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Craig Hettenbach has given his Buy rating due to a combination of factors that highlight the potential for significant returns from LifeStance Health Group. The company has demonstrated strong financial performance, notably exceeding EBITDA expectations by 15% in the first quarter of 2025, which suggests that the revenue guidance for 2025 might be conservative. This financial strength is further supported by the company’s ability to more than double its EBITDA margin over the past two years, with expectations for continued margin expansion.
Additionally, LifeStance Health Group has shown impressive growth in its clinician base, increasing by 10% year-over-year, which indicates a strong demand for its platform. The shift in compensation strategy from stock-based compensation to cash bonuses is anticipated to enhance clinician retention and improve margins by reducing stock-based compensation expenses by $40 million over the next four years. Furthermore, the company’s capital allocation strategy, including a pause in mergers and acquisitions, positions it well for sustainable growth. These factors collectively underpin Hettenbach’s positive outlook on the stock.
In another report released on May 7, Canaccord Genuity also maintained a Buy rating on the stock with a $8.00 price target.