INOV - Embedded Expectations Analysis - 2021 06 09
Inovalon Holdings, Inc. (INOV:USA) currently trades well above corporate averages relative to UAFRS-based (Uniform) earnings, with a 31.6x Uniform P/E, implying bullish expectations for the firm. However, although management's concerns about their growth, investments, and margins suggest potential short-term headwinds, market expectations are too pessimistic, and longer-term equity outperformance is warrantedSpecifically, management may lack confidence in their ability to sustain legacy business revenues and maintain EBITDA margins. In addition, they may be overstating their leadership position in healthcare data and purpose-built analytics, the potential of expansion opportunities in health care, and their competitive advantage in autoimmune disease data. Furthermore, they may lack confidence in their ability to continue investing in their sales teams, improve investment returns and payback periods, and sustain new customer wins. Also, they may have concerns about the progress of their contractually obligated implementations, their outstanding debt position, and the sustainability of healthcare technology demand
Although management's concerns about revenue growth, investments, and EBITDA margin suggest potential short-term headwinds market expectations are too pessimistic given the firm's phenomenal growth opportunities and strong operating model. As such, longer-term equity outperformance is warranted
Inovalon Holdings is a holding company. Through its subsidiaries, the company is engaged in providing cloud-based platforms empowering data-driven healthcare. Through the Inovalon ONE? Platform, the company brings to the marketplace a capability to interconnect with the healthcare ecosystem, aggregate and analyze data in real-time. The company's technology platforms and analytics are informed by data pertaining to physicians, clinical facilities, individuals, and medical events. The company sells subscription licensing of its platform solutions, as well as provides related arrangements for advisory, implementation, and support services.
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