Bank of America downgraded DOCS to Underperform from Neutral, citing macro pressures.
The brokerage also cut its price target on DOCS to $29 (potential downside of 28% to last close) from $43, based on 25x CY23E EV/EBITDA, a premium to profitable health IT peers such as HealthEquity and Teladoc.
"We believe DOCS should trade at a premium to peers on a revenue and EBITDA multiple basis, given faster revenue growth and higher EBITDA margins," analyst Allen Lutz wrote in a note to clients.
Lutz said there is limited medium-term clarity around DOCS' growth normalization as some of its customers pulled back on mid-year upsells due to macro factors.
Peers like Medscape and names in paid search are becoming more aggressive on price, adding further near-term pressure to DOCS' revenue growth.
BofA cut its FY23 revenue estimates to $429.5M from $454.7M and FY24 estimates to $545.5M from $591.1M, citing macro pressures.
It also reduced FY23 EBITDA estimates to $181.0M from $195.7M and FY24 estimates to $222.7M from $248.9M, citing slower revenue growth and weaker gross margins.
Piper Sandler cut its PT on DOCS to $39 from $44, implying potential downside of 3.2% to last close.
"Sales challenges could persist or broaden and FY23 outlook is still not conservative. We continue to believe DOCS is best positioned to capture the secular shift from in-person to digital marketing within life sciences," said analyst Jessica Tassan.
Tassan believes transitory headwinds created a buying opportunity for long-term investors, reiterating Overweight rating.
Shares of DOCS declined ~33% YTD.