As more Americans seek to grow their families through fertility treatments, Progyny will be a major beneficiary, according to BTIG. The Wall Street firm initiated coverage of the stock with a buy rating on Monday, noting that the fertility benefits management company “delivers the joy of parenthood” with its superior results. Its $50 price target implies a 34.7% upside from Friday’s close. Progyny partners with companies to provide fertility and family-building benefits for employees. It has a network of fertility specialists, a pharmacy and what it calls Smart Cycle, which combines individual services, tests and treatments. The company, which had a market capitalization of $1.3 billion when it went public in 2019, now has a market capitalization of $3.7 billion. “The fertility space is expanding rapidly, as the incidence of infertility increases and more patients turn to additional support for what can be a financially limiting and emotionally taxing process,” analyst David Larsen wrote in a note to clients. PGNY mountain 2019-10-25 Progyny’s performance since its October 2019 IPO. Progyny has a total addressable market of $8 billion, as calculated using data from the Centers for Disease Control and Prevention, Larsen said. But the figure does not take into account those who are not actively seeking treatment for infertility. It could be twice as much if there was increased coverage and availability, BTIG estimated. The lucrative total addressable market is largely untapped, Larsen said. “We also like PGNY’s strong revenue growth, strong margin expansion and near-perfect retention rates for existing clients. The company is led by a management team with extensive experience in the healthcare research and payer space,” he added. Not only is the incidence of infertility increasing, but employees are pushing for their employers to provide or expand fertility benefits, he noted. Traditional insurance coverage may be limited, but the cost of treatment is expensive. The average price tag for an in vitro fertilization (IVF) cycle is $12,400, according to the American Society for Reproductive Technology. Medications can add another $3,500 to $7,000 to the bill. “With a tight labor market, companies are more consistently looking to work with Progyny to attract and retain high-quality talent,” Larsen said. “PGNY also tends to result in lower maternity and healthcare costs for employers because PGNY’s narrow network of specialists and patient care advocates know how to safely navigate ART (Assisted Reproductive Technology) cycles, which typically prevent multiple births that can result in high-cost complications and expensive NICU (neonatal intensive care unit) stays.” The company has primarily relied on organic growth, but there are also untapped opportunities for strategic expansion and potential acquisitions, he said. “PGNY can continue to improve its fertility offerings. PGNY can put resources into acquiring companies with capabilities that enhance or integrate well with its own. There are smaller, fast-growing companies entering the space that serve more niche areas related to fertility,” Larsen wrote. — CNBC’s Michael Bloom contributed reporting.
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