On Wednesday, BTIG adjusted its financial outlook for DocGo (NASDAQ:DCGO) shares, reducing the price target to $11.00 from the previous $13.00. Despite this change, the firm maintained a Buy rating. The revision follows a recent report that New York City will not renew its migrant services contract with DocGo once it expires.
The Politico article, released on Tuesday, detailed the city's decision to conclude its relationship with DocGo. New York City, under Mayor Adams's administration, plans to issue a competitive bid to find a new service provider.
The current one-year contract with DocGo is set to last through May 5, 2024, but conversations with DocGo management suggest a significant part of the contract may extend to the end of the calendar year 2024. However, it is anticipated that the contract's services will begin to decrease in the second half of the year.
According to the report, New York City will transition to using Garner Environmental Services, a private company, to support approximately 1,800 migrants within the city. Meanwhile, DocGo will maintain its operations in upstate New York to assist a similar number of migrants. The cost savings for New York City are estimated at around $10 per person, per night, due to the lower housing costs upstate, which suggests that the operations in New York City are likely lower margin for DocGo.
The financial implications of this transition for DocGo are significant, as the contract with New York City has been a notable part of their business. The company will continue to provide services upstate, which may offset some of the financial impact from the loss of the New York City contract. BTIG's revised price target reflects these new developments and the anticipated effects on DocGo's financial performance.
InvestingPro Insights
Amidst the evolving landscape for DocGo (NASDAQ:DCGO), BTIG's recent adjustment of their price target to $11.00 signals a cautious yet optimistic outlook for the company. In light of this, an analysis of real-time data from InvestingPro reveals several key metrics that investors may find pertinent. DocGo's market capitalization stands at approximately $401.06 million, and the company is trading at a high earnings multiple with a P/E ratio of 59.98 based on the last twelve months as of Q4 2023. Despite the high valuation, DocGo has demonstrated a substantial revenue growth of 41.72% over the same period, outpacing many of its peers.
InvestingPro Tips suggest that analysts are expecting net income growth for DocGo this year, which could be a silver lining for investors concerned about the company's future profitability. Additionally, the company has shown a strong return over the last three months, with a price total return of 26.42%, reflecting some investor confidence in its operational capabilities and market position. However, it's important to note that two analysts have revised their earnings estimates downwards for the upcoming period, which could indicate potential headwinds.
DocGo's financial health is also characterized by a moderate level of debt and the absence of dividend payments to shareholders, which may influence investment decisions depending on individual strategies. For those interested in a deeper dive into DocGo's financials and future prospects, InvestingPro offers additional insights and metrics. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of InvestingPro Tips available for DocGo at https://www.investing.com/pro/DCGO.
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