Signify Health (NYSE:SGFY) shares gained in the pre-market trading Wednesday after BTIG launched its coverage on the home health service provider with a Buy recommendation noting, among other things, its buyout potential.
The analysts David Larsen and Aron Corin point to the recent news reports indicating that health insurers UnitedHealth Group Inc. (UNH), CVS Health Corp. (CVS), and eCommerce giant Amazon (AMZN) were eyeing a deal to acquire the company.
“Our view is that SGFY is a unique asset in the (home care) space which makes it high-value to plans and provider clients as well as potential strategic acquirers,” the duo wrote, assigning a $35 per share target for the stock.
Citing a “manageable debt load,” BTIG projects $150M in free cash flow for the company in 2023 and estimates at least a 20%+ annual growth rate for SGFY’s largest segment, Home & Community Service (HCS).
With a view that “SGFY can stand alone and does not need to sell itself,” the analysts noted that the highest quality businesses with good earnings models in the health tech space are likely to become the most attractive buyout targets
Revenue from HCS rose ~20% YoY compared to ~5% YoY growth in the smaller Episodes of Care Services segment, SGFY disclosed with its latest 10-Q filing this month.