© Reuters. Accolade (ACCD) shares surge; BofA moves to Buy as selloff is ‘well overdone’
Bank of America analysts upgraded shares of Accolade (NASDAQ:) to Buy from Neutral with a price target of $16.50.
Analysts see an “appealing long-term trajectory and breakeven path,” hence the rating upgrade.
Shares are up 9.6% in pre-market Wednesday.
“ACCD is a vital digital front door to employer benefits, with its core navigation/advocacy business well-supported by its ancillary virtual care (primary care/mental health) and expert second opinion businesses. ACCD’s steady growth profile, supported by recurring per member per month (PMPM fees) and at-risk performance guarantee revenue, should sustain its high-teens/approaching 20% growth rate,” analysts wrote in a client note.
They also argue that the current market valuation isn’t reflective of the long-term target ramp. Shares of Accolade fell sharply in recent weeks after earnings and analyst day.
The analysts believe the selloff is “well overdone” while the stock offers “a highly appealing risk-reward.”
“While we are not quite there yet [on the EBITDA breakeven], we are close, and we do not think the recent pullback gives ACCD credit for that push,” analysts concluded.
Accolade shares are up 42.2% year-to-date through Wednesday’s close.
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