Progyny falls after Spruce Point issues 'strong sell' opinion
07/02/2023 18:23
** Shares of fertility benefits management company Progyny
Inc PGNY.O down 4.9% at $31.78
** Spruce Point estimates 60%-80% downside risk to PGNY's
share price, issues "strong sell" opinion
** PGNY's relationships with its clinics are non-exclusive,
company lacks operational control over costs and quality and any
meaningful differentiation in its clinic network, the investment
manager says
** Revenue from company's largest customers, Amazon.com
AMZN.O and Alphabet Inc GOOGL.O , declined for the first time
(ex-COVID) in Q3 2022, Spruce Point says, adding that company
has glossed over threats to its client base and has likely
understated client churn
** In a rebuttal to Spruce Point's note on layoffs, analysts
at KeyBanc Capital Markets argue the concern is nothing new
** "While we believe the recent tech layoffs will provide a
headwind to 'covered lives' in 2023, we believe PGNY can
continue to win new clients (outside of tech) and we are already
baking in no growth in covered lives in 2023," KeyBanc analyst
Scott Schoenhaus writes in a note
** Schoenhaus rates PGNY "overweight" with $45 PT
** Progyny did not immediately respond to a Reuters request
for comment
(Reporting by Shashwat Chauhan in Bengaluru)
((Shashwat.Chauhan@thomsonreuters.com))