JPMorgan downbeat on Definitive Healthcare stock over disappointing revenue projections By Investing.com

On Wednesday, Definitive Healthcare Corp (NASDAQ:) stock experienced a downgrade in its rating by JPMorgan, shifting from Neutral to Underweight. Accompanying this change, the firm also reduced the price target for the company’s shares to $5.00 from the previous $7.00.

The adjustment follows Definitive Healthcare’s pre-release of its second-quarter results, which, despite outperforming revenue expectations by approximately 2%, also included a downward revision of the full-year 2024 guidance. The company now projects a year-over-year growth ranging from a 2% decline to no growth, a significant drop from the earlier forecast of 1-4% growth.

The revised outlook comes ahead of the company’s scheduled earnings call on August 5, where further details are expected to be discussed. A key area of focus for analysts and investors will likely be the company’s calculated remaining performance obligations (CRPO), a metric not disclosed in the pre-release but is considered a crucial indicator of future growth.

The reassessment by JPMorgan reflects concerns that the lack of improvement in CRPO, especially since it remained at 1% growth in the first quarter of 2024, could exert additional pressure on the company’s growth prospects for 2025. The firm’s analysts have projected a potential 1% decline in revenue growth for 2025, a stark contrast to their previous estimate of 6% growth.

In other recent news, Definitive Healthcare Corp has reported mixed results for the first quarter of 2024. The company met its revenue expectations, bringing in $63.5 million, a 7% increase year-over-year.

Despite this, the corporation faced challenges with new logo and upsell expectations, attributing underperformance to macroeconomic headwinds and internal restructuring. In response, Definitive Healthcare has announced a $20 million share buyback program and adjustments to its full-year guidance.

In other developments, the company has appointed Kevin Coop as its new CEO. Coop, who has over three decades of experience in operations, product development, and revenue generation, will succeed company founder and Executive Chairman Jason Krantz. Prior to his appointment, Coop held executive leadership roles at firms such as Dun & Bradstreet and Black Knight (BMV:).

These are among the recent developments for Definitive Healthcare as the company navigates the current market conditions and sets its sights on future growth. The firm’s focus remains on operational excellence, product development, and customer success initiatives, with an emphasis on enterprise customers.

InvestingPro Insights

Following the downgrade by JPMorgan, the latest data from InvestingPro shows Definitive Healthcare Corp’s market capitalization standing at $902.18 million, with a notable gross profit margin of 85.95% for the last twelve months as of Q1 2024. This high margin highlights the company’s ability to maintain profitability in its core operations despite its overall net loss. Moreover, analysts predict that the company will be profitable this year, which could signal a turnaround from its current non-profitable status.

Two InvestingPro Tips that stand out in relation to the article are the company’s liquid assets surpassing short-term obligations and the moderate level of debt it operates with. These factors could provide Definitive Healthcare with a degree of financial resilience amidst the revised revenue projections and market rating downgrade. It’s also worth noting that the company does not pay a dividend, which may be a consideration for income-focused investors.

For readers looking to delve deeper into Definitive Healthcare’s financials and future prospects, there are additional InvestingPro Tips available. By using the coupon code PRONEWS24, users can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These insights can help investors make more informed decisions in the context of the company’s recent performance and analysts’ expectations.

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