KeyBanc starts Lifestance Health with Overweight rating

 On Tuesday, KeyBanc Capital Markets initiated coverage on shares of Lifestance Health Group (NASDAQ:LFST), a behavioral health company, with an Overweight rating and set a price target of $9.00. The coverage launch is based on the firm’s positive outlook for the company’s growth prospects. Currently trading at $6.51, the stock sits between analyst targets ranging from $8 to $11. 

KeyBanc analysts anticipate that Lifestance Health Group will experience mid-teens organic top-line growth over the next few years. This outlook aligns with the company’s impressive 18.5% revenue growth in the last twelve months and strong historical performance, with a five-year revenue CAGR of 43%. This growth is expected to be mainly fueled by an increase in visit volumes due to the addition of more clinicians and an improvement in total revenue per visit, which is likely to arise from better reimbursement rates from payors.

The analysts also predict that the company will see margin expansion, attributed to a recently optimized real estate footprint, enhanced clinician productivity, introduction of higher-margin specialty offerings, and ongoing cost efficiencies achieved through technology improvements.

A significant aspect of Lifestance Health Group’s business strategy, as highlighted by KeyBanc, is the company’s acceptance of over 150 different insurances. This wide range of accepted insurances is believed to contribute to higher patient retention and lower customer acquisition costs, leading to less revenue volatility and broader profit margins.

Furthermore, Lifestance Health Group’s approach to treatment, which includes both virtual and in-person visits, stands out as a unique feature. Approximately 70% of patient visits are conducted virtually, while the remaining 30% take place at one of the company’s more than 550 centers, which are spread across 33 states. This dual-channel offering is seen as a key differentiator for the company in the behavioral health space. 

https://in.investing.com/news/analyst-ratings/keybanc-starts-lifestance-health-with-overweight-rating-93CH-4763151