Alignment Healthcare (NASDAQ:ALHC) Sees Strong Trading Volume - Should You Buy?

Key Points

• Alignment Healthcare shares rose 6% to about $9.48 on unusually heavy volume of 5.4 million shares, up 12% from the prior session.
• The latest quarter exceeded expectations, with EPS of $0.17 versus $0.13 expected and revenue rising 31.6% year over year to $1.34 billion.
• Despite a “Moderate Buy” consensus and a $23.60 average price target, investors remain concerned about Medicare Advantage star ratings, potential reimbursement reforms, the recent selloff, and securities-fraud investigations.

Shares of Alignment Healthcare, Inc. (NASDAQ:ALHC - Get Free Report) saw unusually-strong trading volume on Thursday . 5,399,507 shares changed hands during mid-day trading, an increase of 12% from the previous session's volume of 4,804,313 shares.The stock last traded at $9.4790 and had previously closed at $8.71.

Trending Headlines about Alignment Healthcare

Here are the key news stories impacting Alignment Healthcare this week:

• Positive Sentiment: Some analysts still view the decline as excessive. Brokerages maintain an overall “Moderate Buy” rating, while coverage has identified Alignment Healthcare as a potentially attractive healthcare stock after its 57% slide. However, these opinions are based partly on valuation and may not offset concerns about future operating performance. Brokerage Recommendation
• Positive Sentiment: The company’s latest reported quarter was stronger than expected, with earnings of $0.17 per share versus a $0.13 consensus estimate and revenue up 31.6% year over year. That recent operating momentum could support a recovery if Medicare Advantage concerns stabilize.
• Neutral Sentiment: CEO John Kao sold 27,400 shares for approximately $356,200 under a pre-arranged Rule 10b5-1 trading plan. The planned nature of the transaction reduces its value as a bearish signal, although his direct ownership fell by 4.43%. SEC Insider Sale Filing
• Negative Sentiment: Investors reacted negatively to management’s comments at the Baird investor conference, particularly the apparent lack of clarity regarding Medicare Advantage star ratings. Those ratings can influence reimbursement, bonuses and enrollment, making the uncertainty a major concern for Alignment’s outlook. Baird Conference Coverage
• Negative Sentiment: Investors are also evaluating proposed Medicare Advantage reforms and how changes to payment rules could affect the company’s margins and growth. This regulatory uncertainty has contributed to the stock’s recent decline. Medicare Advantage Reform Coverage
• Negative Sentiment: Multiple law firms have announced or continued securities-fraud investigations following the conference-related selloff. The announcements do not establish wrongdoing, but they add potential legal, reputational and overhang risks for ALHC. Securities Fraud Investigation

Analyst Ratings Changes

ALHC has been the subject of several analyst reports. TD Cowen reiterated a "buy" rating on shares of Alignment Healthcare in a research note on Wednesday. JPMorgan Chase & Co. decreased their target price on shares of Alignment Healthcare from $26.00 to $22.00 and set an "overweight" rating on the stock in a research report on Tuesday, August 4th. KeyCorp reaffirmed an "overweight" rating on shares of Alignment Healthcare in a report on Wednesday, June 10th. Raymond James Financial downgraded shares of Alignment Healthcare from a "strong-buy" rating to an "outperform" rating and dropped their price target for the company from $22.00 to $19.00 in a research report on Monday, August 3rd. Finally, UBS Group reiterated a "neutral" rating on shares of Alignment Healthcare in a research note on Wednesday, July 8th. Seven analysts have rated the stock with a Buy rating and four have issued a Hold rating to the stock. According to data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and a consensus price target of $23.60.

Alignment Healthcare Trading Up 6.0%

The firm's fifty day simple moving average is $15.44 and its 200 day simple moving average is $17.82. The stock has a market capitalization of $1.92 billion, a P/E ratio of 48.57 and a beta of 1.11. The company has a debt-to-equity ratio of 1.22, a quick ratio of 1.70 and a current ratio of 1.70.

Alignment Healthcare (NASDAQ:ALHC - Get Free Report) last issued its quarterly earnings results on Thursday, July 30th. The company reported $0.17 earnings per share for the quarter, topping analysts' consensus estimates of $0.13 by $0.04. The company had revenue of $1.34 billion during the quarter, compared to the consensus estimate of $1.31 billion. Alignment Healthcare had a net margin of 0.89% and a return on equity of 20.02%. The firm's quarterly revenue was up 31.6% on a year-over-year basis. During the same quarter in the prior year, the firm posted $0.07 EPS. As a group, equities research analysts forecast that Alignment Healthcare, Inc. will post 0.17 EPS for the current fiscal year.

Insider Transactions at Alignment Healthcare

In related news, President Dawn Maroney sold 122,707 shares of the company's stock in a transaction on Friday, September 11th. The stock was sold at an average price of $12.68, for a total transaction of $1,555,924.76. Following the completion of the sale, the president directly owned 794,606 shares in the company, valued at $10,075,604.08. This represents a 13.38% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO John Kao sold 385,270 shares of the stock in a transaction dated Friday, September 11th. The stock was sold at an average price of $12.68, for a total transaction of $4,885,223.60. Following the completion of the transaction, the chief executive officer directly owned 1,223,473 shares of the company's stock, valued at $15,513,637.64. This trade represents a 23.95% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last quarter, insiders sold 1,353,977 shares of company stock valued at $20,263,764. Corporate insiders own 5.20% of the company's stock.

Institutional Investors Weigh In On Alignment Healthcare

Several hedge funds have recently modified their holdings of the company. Wellington Management Group LLP grew its position in shares of Alignment Healthcare by 9.8% in the 2nd quarter. Wellington Management Group LLP now owns 18,780,363 shares of the company's stock valued at $447,160,000 after buying an additional 1,681,427 shares during the last quarter. William Blair Investment Management LLC acquired a new stake in Alignment Healthcare in the second quarter worth $184,799,000. Geode Capital Management LLC increased its stake in Alignment Healthcare by 8.4% in the fourth quarter. Geode Capital Management LLC now owns 3,841,703 shares of the company's stock valued at $75,884,000 after purchasing an additional 299,279 shares in the last quarter. Danica Pension Livsforsikringsaktieselskab bought a new stake in Alignment Healthcare in the second quarter valued at $87,794,000. Finally, Bank of New York Mellon Corp acquired a new position in shares of Alignment Healthcare during the second quarter valued at about $87,077,000. Institutional investors and hedge funds own 86.19% of the company's stock.

About Alignment Healthcare

Alignment Healthcare, Inc is a technology-enabled healthcare company that provides Medicare Advantage health plans and care-management services for older adults. Through its Alignment Health Plan subsidiary, the company offers insurance coverage designed for Medicare-eligible members, including primary and specialty care coordination, prescription drug benefits, preventive services and access to a network of healthcare providers.

The company combines health-plan operations with proprietary technology intended to support personalized care.

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