LifeStance named Top Pick in Healthcare Technology at Morgan Stanley

Morgan Stanley is naming LifeStance (LFST) as the firm’s Top Pick in Healthcare Technology and sees nearly 60% upside to the firm’s $10 price target, telling investors that the company had one of the strongest earnings reports among the analyst’s coverage. However, despite positive estimate revisions and a 30% gain the day of earnings, the stock is now trading below where it was into the report, noted the analyst, who expects to see more sustainable gains as investors gain confidence in margin expansion and liquidity in the stock eventually improves from the high level of private equity ownership today. LifeStance replaces R1 RCM (RCM) as Top Pick, though the firm maintains an Overweight view and contends that New Mountain’s offer is opportunistic and undervalues RCM. If R1 beats 2024 guidance, as the firm expects, it should help in driving the stock to the firm’s $17 price target, the analyst added.