Investing.com — Four major Wall Street brokerages downgraded on Monday after the healthcare software company slashed its fiscal 2027 revenue outlook, citing weakening demand in its Network Solutions business.
The cut sent the company’s shares tumbling more than 26% in premarket trading Tuesday.
Baird, Truist Securities, JPMorgan, and Citi all cut their ratings on the stock to Neutral-equivalent from Buy, and sharply reduced price targets ranging from $10 to $16.
The moves come after Phreesia lowered its revenue guidance for the fiscal 2027 (FY27) by roughly $35–$39 million to $510–$520 million, well below the consensus of around $552 million.
The cut, which management attributed to lower spending commitments from certain pharmaceutical manufacturers — particularly in vaccines, GLP-1s and public health — represents a deceleration to low-single-digit organic revenue growth, down from the 8–10% previously expected.
The company maintained its adjusted EBITDA outlook of $125–$135 million, thanks to operating leverage and AI-driven efficiency gains.
Phreesia reported fourth-quarter revenue of $127 million, up 16% year-over-year, with adjusted EBITDA of $29 million, both slightly ahead of estimates. The quarter also marked the company’s first full year of positive GAAP net income and a record quarterly free cash flow of $28.5 million.
Nonetheless, those bright spots were far outweighed by the guidance revision.
Truist Securities analyst Jailendra Singh said the move marked a “surprising magnitude of change given that the company previously characterized their preliminary outlook as a “conservative” starting point.”
“With the narrative shifting from a ’Show Me’ story to one of ’No Growth Visibility,’ we are downgrading our rating to Hold,” Singh wrote.
In a separate note, JPMorgan flagged execution risk around the company’s plan to offset lower revenue through cost cuts and AI-driven efficiency measures.
“While we recognize that PHR is deliberately moderating subscription pricing to optimize retention/adoption and drive downstream monetization in payment solutions, timing of putting more weight on the less certain Network Solutions revenue line appears unfortunate,” analyst Alexei Gogolev said.
Citi analyst Daniel Grosslight said the stock was “likely to be range-bound in the near-term” until there is more clarity on pharma direct-to-consumer ad spend, AI-driven operating leverage and the early-stage AccessOne and HCP advertising businesses.
Meanwhile, Baird analyst Joe Vruwink emphasized the magnitude of the cut was “more than we expected, and this likely extends the overhang around the stock amidst other AI/SaaS debates.”
