GoHealth (GOCO-19.8%) has recorded the sharpest intraday loss since August 2021 after Bank of America downgraded the insurance broker to Underperform from Buy even after its stock witnessed a ~72.3% decline in 2021. The price target cut to $3.50 from $7.50 per share implies a downside of ~14.8% to the last close.
The analysts led by Michael Cherney acknowledge that their decision might seem “late.” However, they observe a competitive market that can limit profit upside and the path to breakeven in cash flow.
The team has lowered the company’s 2022 EV/EBITDA multiple to 4x from 6x to indicate lowered estimates and the decline in the group multiple. The revised multiple might appear “penal,” the analysts wrote, arguing that it is still prudent and in line with those of peers, given the mismatch between the profitability and cash flow.