Stifel starts Tabula Rasa HealthCare at buy

Stifel launched coverage of Tabula Rasa HealthCare (NASDAQ:TRHC) with a “buy” rating and $17 price target. The stock closed at $14.23 on Friday.

Tabula is a healthcare information technology company focused on medication management solutions created from equal parts data and science, and aimed, when appropriate, at the individual using genetic information.

Analyst Thomas Carroll writes that the primary goal is to reduce adverse drug events, improve outcomes, and lower costs, and results demonstrate success with all three goals.

“We are excited by the potential for stock appreciation in the coming year for three primary reasons,” he added. These include strong revenue and earnings growth; the Program for the All-inclusive Care for the Elderly is a primary customer that is growing; and Tabula’s recently awarded participation in the CMS Enhanced Medication Therapy Management demonstration.

“Participating in large Medicare demonstrations has been shown to drive stock returns of the companies involved,” he pointed out.

Mr. Carroll also noted that Tabula is trading at a discount to a peer group of stocks. For example, on a 2017 EV-to-EBITDA basis, Tabula is trading at a multiple of 11.2 times, compared with 14.4 times for the comparable stocks.