INOV - Embedded Expectations Analysis - 2021 08 30
Inovalon Holdings, Inc. (INOV:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 37.0x Uniform P/E, implying somewhat bullish expectations for the firm. However, although management's concerns about revenue guidance, contract wins, and sales trend disruptions suggest potential short-term headwinds, market expectations are still too pessimistic, and longer-term equity outperformance remains warranted.Specifically, management may lack confidence in their ability to meet their upwardly revised revenue guidance, sustain platform revenue growth, and improve wallet share penetration for global top pharma companies and specialty pharmacies. In addition, they may have concerns about disruptions to their sales trends, the sustainability of platform demand increases, and the pace their products and services translate into measurable improvements for clients. Furthermore, management may lack confidence in their ability to sustain long-term contract wins and expand the number of providers in their platform. Finally, they may be exaggerating their data stream capabilities and the potential of their customer experience initiatives.
Although management's concerns about revenue guidance, contract wins, and sales trend disruptions suggest potential short-term headwinds, market expectations are still too pessimistic given the firm's phenomenal growth opportunities and strong operating model. As such, longer-term equity outperformance remains 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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