On Friday, a Needham analyst adjusted the outlook for Accolade Inc. (NASDAQ:ACCD), reducing the price target to $8 from the previous $13 but continuing to recommend the stock as a Buy. The revision follows Accolade's announcement of first-quarter earnings for fiscal year 2025, which surpassed expectations, yet was accompanied by a lowered revenue forecast for the full year.
Accolade's first-quarter revenue exceeded the consensus by $6 million, but the company has decided to lower its fiscal year 2025 revenue guidance by approximately $22.5 million at the midpoint. This decision is part of a strategy to "de-risk" guidance and meet profitability goals amid challenging economic conditions.
The healthcare company is scaling back on additional marketing investments that were expected to drive growth in its usage-based revenue, particularly from its consumer virtual primary care (VPC) business, Plushcare, and other platform-connected revenue streams within the core B2B segment. These segments also include VPC, EMO, and partner revenues.
Despite the cutback in marketing spend and the conservative outlook, the analyst reiterated a Buy rating on Accolade's shares. The firm acknowledged the company's focus on profitability, even though there was an anticipation for more potential growth in adjusted EBITDA.
The adjustment in Accolade's financial strategy and the revised price target reflect the company's response to the current economic landscape, prioritizing sustainable profitability over aggressive growth.
In other recent news, healthcare company Accolade Inc. has reported an 18% year-over-year revenue growth for the first quarter of fiscal year 2025, amounting to $110.5 million. The company has revised its full-year revenue outlook for 2025, projecting it to fall between $460 million and $475 million, indicating a year-over-year growth of 11% to 15%. However, the company's long-term revenue goal of $1 billion has been postponed by approximately one year.
Truist Securities and DA Davidson have revised their price targets for Accolade, with Truist maintaining a Buy rating while lowering the target to $9, and DA Davidson maintaining a Neutral rating while lowering the target to $5. These adjustments follow a 5% reduction in expected revenue for fiscal year 2025 due to more stringent criteria applied to marketing investments.
Despite this, Accolade's EBITDA outlook for FY25 remains positive, ranging from $15 million to $20 million. The company's customer base of over 1,200 and 14 million members underlines its commitment to financial stability. In the near future, Accolade plans to discuss its long-term strategies at an Analyst Day, emphasizing sustainable growth while prioritizing profitability and bottom-line performance.
InvestingPro Insights
Following the Needham analyst's updated outlook for Accolade Inc. (NASDAQ:ACCD), real-time data and insights from InvestingPro provide a deeper dive into the company's financial health and market performance. With a market capitalization of $511.25 million, Accolade's stock price volatility remains a note of interest for investors, as reflected by recent price movements. The company's revenue growth has been positive, with a notable 14.09% increase over the last twelve months as of Q4 2024, and an even more impressive quarterly revenue growth of 26.06% for Q4 2024.
However, the InvestingPro Tips highlight that analysts are not expecting Accolade to be profitable this year, which aligns with the company's reported operating income margin of -27.42% for the same period. Despite this, Accolade's gross profit margin stands strong at 46.52%, indicating a solid core business performance. Investors should also consider that Accolade's liquid assets surpass its short-term obligations, suggesting the company is in a good position to manage its debt, which is characterized by a moderate level.
Interested parties may find additional insights and tips on Accolade, including further data on stock performance and analyst projections, by visiting InvestingPro's dedicated page for Accolade at https://www.investing.com/pro/ACCD. Currently, InvestingPro offers 9 more tips for a comprehensive understanding of the company's financial outlook. For a deeper analysis and to take advantage of these insights, use the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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