Wells Fargo lowers Accolade stock price target, cautious on revenue outlook



Wells Fargo on Tuesday revised its outlook on shares of healthcare solutions provider Accolade Inc. (NASDAQ: ACCD ), lowering the price target to $10.00 from the previous price of $12.00 while maintaining an equal-weight rating. The revision reflects the company's more cautious stance on its revenue outlook and a shift in valuation methodology.

The company acknowledged Accolade's improved margins but expected fiscal 2026 revenue growth to be below consensus. Derived from enterprise value/gross profit (EV/GP).

In fiscal 2024, approximately 68% of Accolade's incremental growth will come from usage-based fees. Access fees contributed 32% of this increase, equivalent to an increase of approximately $16 million. However, direct-to-consumer (DTC) Plushcare (part of Accolade's service offering) is estimated to have added approximately $23 million in incremental growth to the access fee portion.

This shows that enterprise-related access expenses actually fell $7 million year over year in fiscal 2024.

Wells Fargo's analysis shows Accolade's revenue streams are nuanced, with varying levels of growth across business units. Despite the price target adjustment, the company's Equal Weight rating indicates that the stock's current market price is considered consistent with its valuation.

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Investment Professional Insights

Accolade Inc. (NASDAQ: ACCD ) has been the subject of expected changes recently, and live data from InvestingPro provides further context for those moves. The company has a market capitalization of approximately $641.74 million, and its financials and stock performance provide insights into its current valuation. The price-to-earnings ratio, a measure of how much investors are willing to pay for a dollar of earnings, currently stands at negative -6.11, reflecting the market's view of future profit potential. The negative price-to-earnings ratio is consistent with the company's trailing twelve month performance, showing that Accolade has not made a profit during this period.

InvestingPro Tips highlights that Accolade's shares have experienced significant volatility, falling significantly last week and over the past month, but also rising significantly in price over the past six months. This volatility is important for investors to consider when evaluating stocks. Additionally, the company's current assets exceed its short-term liabilities, indicating financial stability in meeting its immediate liabilities. However, analysts don't expect the company to be profitable this year, which is an important consideration for future-oriented investors.

For those who wish to gain insight into Accolade's prospects and performance, InvestingPro provides additional tips and indicators.Use coupon code PRONEWS24, readers can receive an additional 10% discount by subscribing to Pro and Pro+ annually or every two years, thereby obtaining rich financial analysis and data to inform investment decisions. There are currently 9 additional InvestingPro Tips available that provide more detailed guidance on Accolade's financial health and stock performance.

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