New York City’s MultiPlan Corporation (MPLN) provides data analytics and technology-enabled cost management, payment, and revenue integrity solutions to the healthcare industry in the United States.

It reported impressive fiscal year results with revenues and EPS in line with Wall Street estimates. The company anticipates revenues of $1.16 – 1.20 billion and adjusted EBITDA of $850 – 875 million for 2022.

However, its annual guidance assumes an estimated COVID-related impact of approximately $25 – 30 million on its revenue and $20 – 24 million on its adjusted EBITDA. The stock has declined 28.2% in price over the past six months to close yesterday’s trading session at $4.30. In addition, it is currently trading 56.1% below its 52-week high of $9.69, which it hit on June 25, 2021.

Here is what could influence MPLN’s performance in the coming months:

Improving Financials

MPLN’s revenues surged 19.2% year-over-year to $1.12 billion for its fiscal year ended Dec.31, 2021. In addition, its adjusted EBITDA grew 18.7% year-over-year to $838.30 million. The company’s net income came in at $102.10 million compared to a $520.60 million loss in the prior year. Also, its EPS came in at $0.16 compared to a $1.11 loss in the year-ago period.

Reasonable Valuation

In terms of forward P/S, MPLN’s 2.26x is 57.6% lower than the 5.33x industry average. Likewise, its 9.17x forward EV/EBITDA is 47.9% lower than the 17.61x industry average. Furthermore, the stock’s 16.71x forward EV/EBIT is lower than the 17.58x industry average.

POWR Ratings Don’t Indicate Enough Upside

MPLN has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MPLN has a C grade for Quality, which is in sync with its 0.14% trailing-12-month asset turnover ratio, which is 60.5% lower than the 0.34% industry average.

MPLN also has a D grade for Growth. This is justified because analysts expect its EPS to decline 42.9% year-over-year to $0.04 in the current quarter, ending March 31, 2022.

MPLN is ranked #31 out of 59 stocks in the D-rated Software – Business industry. Click here to access MPLN’s ratings for Sentiment, Stability, Momentum, and Value.

Click here to check out our Software Industry Report for 2022

Bottom Line

MPLN could keep losing in the near term due to its lower-than-industry profitability and weak growth prospects. Therefore, we think it could be wise to wait for better entry points in the stock.

How Does MultiPlan (MPLN) Stack Up Against its Peers?

While MPLN has an overall POWR Rating of C, one might want to consider investing in the following Software – Business stocks with an A (Strong Buy) rating: F5 Networks, Inc. (FFIV), VMware Inc. (VMW), and Sapiens International Corporation N.V. (SPNS).

MPLN shares were trading at $4.44 per share on Monday morning, down $0.16 (-3.48%). Year-to-date, MPLN has gained 0.23%, versus a -4.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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