Is Progyny a good buy opportunity at the current share price?

Progyny, Inc (NASDAQ: PGNY) shares have weakened more than 20% since November 05, even though the company reported strong third-quarter results.

Management expects a further business acceleration

Progyny is a company that specializes in fertility and family building benefits solutions for employers in the United States by the combination of clinical and emotional support.

Progyny reported strong third-quarter results in November; total revenue has increased by 23.6% Y/Y to $122.28 million, slightly below expectations, while the GAAP earnings per share were $0.17 (beats by $0.12).

Fertility benefit services revenue has increased 17% compared to the third quarter last year to $73.1 million, while Pharmacy revenue increased 43% and reached $37 million.

Gross profit for the third quarter was $28.5 million, up 37% from the third quarter of 2020, and it is important to say that the gross margin has increased by 220 basis points from the prior-year period.

Strong results during the third quarter were primarily driven by the increase in the number of clients and covered lives. During the third-quarter earnings report call, the company’s management announced that the full year 2021 revenue growth should be between 47% and 49%.

The company’s management also reported that it expects a further business acceleration in the upcoming quarters. Pete Anevski, Progyny’s President and Chief Operating Officer, added:

Given the momentum in new sales activity, as well as our near 100% client retention rate, we expect that revenue will grow by approximately 50% in 2022, which is comparable to the rate of growth that we expect to achieve for the full 2021 fiscal year. The company anticipates having 265 clients representing an estimated 4 million covered lives by the end of the second quarter of 2022.

Progyny ended the third quarter with 188 clients (each with at least 1000 covered lives), reflecting a growth of approximately 39% compared with the first nine months of 2020.

Progyny is expanding its market share, but with a $4.65 billion market capitalization, shares of this company are not cheap.

Progyny trades at more than a hundred times TTM EBITDA, the book value per share is $2.9, and there are better investment opportunities at the moment.

$60 represents resistance level

Progyny’s stock is currently down more than 20% after reaching its record high of $68,32 on November 05.

Data source: tradingview.com

The strong support level stands at $45, and if the price falls below this level, it would be a strong “sell” signal.

On the other side, if the price jumps above $60 resistance, it would signal trading shares, and the next target could be at $65 or even above.

Summary

Progyny reported strong third-quarter results in November, and the company’s management expects a further business acceleration in the upcoming quarters. Progyny is expanding its market share, but with a $4.65 billion market capitalization, shares of this company are not cheap.

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