On Thursday, RBC Capital Markets initiated coverage on TruBridge Inc (NASDAQ:TBRG), a provider of healthcare billing and revenue cycle management services. The firm has given the stock an Outperform rating and set a price target of $13.00.
The new coverage by RBC Capital comes as TruBridge has shifted its focus towards revenue cycle management for small to mid-sized hospitals, a move that is expected to offer a broader and more lucrative growth opportunity compared to its traditional emphasis on clinical software.
TruBridge's strategic realignment has been highlighted as a key driver for future growth. The company now provides a comprehensive suite of outsourced billing and collection capabilities, which is seen as a significant improvement over its previous offerings. RBC Capital's outlook suggests that this change positions TruBridge to potentially accelerate its EBITDA growth into the low double digits in the next three-plus years.
The company's existing electronic health records (EHR) installed base, which is substantial and showing signs of stabilization, is also expected to contribute to its growth trajectory. Alongside this, TruBridge is undertaking several initiatives aimed at enhancing margins, which are anticipated to further bolster its financial performance.
Despite these positive developments, RBC Capital notes that the current valuation of TruBridge shares at approximately 6 times the projected 2025 EBITDA may not fully reflect the transformation the company is undergoing or the scale of the growth opportunity ahead. This assessment implies that the market has yet to recognize the full potential of TruBridge's strategic pivot and the benefits it could bring.
InvestingPro Insights
As TruBridge Inc (NASDAQ:TBRG) navigates its strategic shift towards revenue cycle management, real-time data and insights from InvestingPro provide a deeper understanding of the company's current financial health and market position. The company's market capitalization stands at a modest $136.8M, reflecting its status as a smaller player in the healthcare billing and revenue cycle management sector. Despite a challenging past performance with a price-to-earnings (P/E) ratio of -9.97 for the last twelve months as of Q4 2023, TruBridge's revenue has grown by 3.91% during the same period, indicating some positive momentum.
InvestingPro Tips highlight that management's aggressive share buyback strategy and the expectation of net income growth this year could be seen as signs of confidence in the company's future. Additionally, with liquid assets surpassing short-term obligations, TruBridge appears to be in a solid position to manage its short-term financial commitments. It's worth noting that analysts predict the company will become profitable this year, which, if realized, could be a significant turning point for TruBridge.
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