PINC - Embedded Expectations Analysis - 2021 12 14
Premier, Inc. (PINC) currently trades below corporate but near recent averages relative to Uniform earnings, with a 13.5x Uniform P/E (Fwd. V/E').At these levels, markets are pricing in expectations for Uniform ROA to decline to new lows of 39%, accompanied by 10% Uniform asset growth.
However, analysts expect Uniform ROA to recover to 73% by 2023, accompanied by 7% Uniform asset shrinkage.
Given the firm's secular growth trends and expansion into more value-added solutions, there is fundamental potential for stronger-than-priced-in performance.
If the company can capitalize on these tailwinds and initiatives, it could drive Uniform ROA to 85% with 10% Uniform asset growth going forward, which would imply a stock price closer to $82, representing approximately 120% equity upside for the firm.
However, the firm's most recent earnings call suggests management may have concerns about Performance Services, EBITDA expansion, and GPO membership.
Premier is a holding company. The company, together with its subsidiaries and affiliates, is a healthcare performance improvement company. The company provides technology-enabled platform that provides supply chain services, clinical, financial, operational and value based care software-as-a-service informatics products, consulting services and performance improvement collaborative programs. The company has two business segments: Supply Chain Services, which assists its members in managing their non-labor expense and capital spend through a combination of products, services and technologies; and Performance Services, which provides information technology analytics and workflow automation and consulting services.
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