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UBS says LifeStance Health stock is undervalued compared to the company’s performance. The firm upgraded shares of the outpatient behavioral health services to buy from neutral on Sunday, and reiterated its $8.50 per share price target. UBS’ forecast implies more than 54% upside from Friday’s $5.49 close. LifeStance shares rose more than 6% in early trading. Analyst Kevin Caliendo says investors may be overlooking the stock over concerns tied to conservative current quarter and full-year earnings guidance from the executives in LifeStance’s most recent earnings release, as well as a change from a stock-to-cash incentive program. He also pointed to the federal government no longer enforcing the mental health parity rule as an additional reason for pressure on the stock. However, the analyst thinks these concerns are overdone. LFST YTD mountain LifeStance Health Group stock in 2025. “We see continuity in the underlying LFST model with the refreshed [management] team alongside a clear path to medium-term targets,” Caliendo said. “LFST has demonstrated success in a 100% organic recruiting model consistently growing clinician count y/y by 10%+. This results in reduced burn and improved ROI, a solid FCF profile (2025e FCF yield of ~3% of equity), and coupled with a healthy balance sheet ($134M in cash; $276M in debt), LFST is well-positioned to pursue further growth opportunities (not contemplated in the 2025 outlook).” Shares have pulled back more than 25% in 2025. The analyst views the sharp pullback as a buying opportunity for investors at an attractive entry point. “Despite the sell-off, which dates back to March, our view is that LFST’s [long-term] growth profile remains intact. The valuation today provides an attractive entry point and a complimentary Risk/Reward (4:1); with the company benefiting from positive secular tailwinds, large and underpenetrated [total addressable market], and a refreshed mgmt. team,” Caliendo said.
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