MultiPlan Corporation (MPLN - Get Rating), which is headquartered in New York City, is a leading value-added provider of data analytics and technology-enabled end-to-end cost management solutions to the U.S. healthcare industry. It recently announced a $250 million share repurchase program, reflecting its business and cash flow strength. Furthermore, it has completed the expansion of its Payment and Revenue Integrity services.

However, the stock has declined 19.9% in price over the past month and 39.5% over the past three months to close yesterday’s trading session at $4.74. 

In addition, it is currently trading 51.7% below its 52-week high of $9.82, which it hit on December 18, 2020. Moreover, it is currently trading below its 50-day and 200-day moving averages of $5.51 and $7.02, respectively, indicating a downtrend.

Click here to check out our Software Industry Report for 2021

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

Improving Financials

MPLN’s revenues surged 33.5% year-over-year to $276.30 million for its fiscal second quarter, ended June 30, 2021. In addition, its adjusted EBITDA grew 37.1% year-over-year to $205.30 million. The company’s net loss came in at $46.93 million, representing a 16.5% year-over-year decrease. Also, its loss per share was $0.07, down 50% year-over-year.

Reasonable Valuation

In terms of forward P/S, MPLN’s 2.80x is 64.2% lower than the 7.83x industry average. Likewise, its 9.66x forward EV/EBITDA is 38.9% lower than the 15.80x industry average.

Ongoing Investigations

Several law firms have launched an investigation into MPLN and certain of its officers on potential violations of the Securities Exchange Act of 1934. It is alleged that the company made materially false and/or misleading statements and failed to disclose material adverse facts. For example, MPLN was losing tens of millions of dollars in sales and revenues to Naviguard, a competitor created by one of the company’s largest customers, UnitedHealthcare (UNH).

Poor Profitability

In terms of its trailing-12-month asset turnover ratio, MPLN’s 0.12% is 65.5% lower than the 0.35% industry average. Furthermore, its trailing-12-month EBIT margin is negative compared to the 2.38% 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 D grade for Quality, which is in sync with its lower-than-industry profitability ratios.

MPLN also has a C grade for Sentiment. This is justified because analysts expect its EPS to decline 37.5% year-over-year to $0.05 in the current quarter, ending December 31, 2021.

Also, the stock has a C grade for Momentum, which consistent with its 40.7% loss year-to-date and 35.7% price decline over the past six months.

MPLN is ranked #37 of 59 stocks in the Software – Business industry. Click here to access MPLN’s ratings for Growth, Stability, and Value as well.

Bottom Line

Several investigations are going on against MPLN. Also, analysts expect its EPS to decline 37.5% in the current quarter. Therefore, 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: SS&C Technologies Holdings, Inc. (SSNC - Get Rating) and CSG Systems International, Inc. (CSGS - Get Rating).

Click here to check out our Software Industry Report for 2021

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