Barron's thinks infusion therapy leader Option Care is undervalued, says 'buy'

Barron's says that shares of Option Care Health, a small company that provides home infusion services, offer a combination of solid growth tailwinds and compelling value that deserves a closer look. The stock price fell last year, but now there is room for a rebound as demand for at-home and alternate site medical services rises.

Long-term investors should take a look at Option Care Health, Barron's says. It is the U.S.'s largest provider of infusion therapies, administering often complex medications at patients’ homes or at one of its more than 170 ambulatory clinics across the U.S. It operates as both a managed care company and a specialty pharmacy.

The U.S. home healthcare market is undergoing powerful growth. Central to this trend is patient preference: An aging population with rising incidents of chronic conditions is increasingly seeking the comfort and convenience of care at home. Insurance networks and health systems, for their part, have embraced the home-care model because it frees up hospital beds and ultimately lowers overall costs.

Revenue more than doubled in 2024 versus 2019, at $4.99 billion, and is on track to climb at least another 10% this year to above $5.5 billion, according to company guidance. Yet despite the surge in profitability and rising margins, shares of Option Care have been roughly flat since 2022 and are down 10.33% over the last 12 months. 

In late 2024, the company received a notice from the manufacturer of the blockbuster drug Stelara that it would significantly reduce the price spread that specialty pharmacies like Option Care can earn by billing customers. While a setback, the selloff may have created an exciting entry point in the stock for investors, Barron's notes, and year to date the stock is up about 21%.

Meanwhile, Barron's cites recent strategic acquisitions of smaller players as evidence of the management’s ability to deploy capital. In January, the company bought Intramed Plus, a regional infusion specialist, expanding its footprint in the Southeast U.S. with new payer relationships.

The potential upside does not come without risks. One of them: the home care industry, which includes names like BrightSpring Health Services, is highly competitive. The publication also names insurers UnitedHealth Group and Cigna Group.

Citizens JMP Securities analyst Constantine Davides recently reiterated his "outperform" rating on Option Care stock, with a price target of $38 per share, implying 38% upside. His report highlighted the “de-risked nature of the company’s therapeutic portfolio” after the Stelara pricing adjustment, suggesting a layer of uncertainty has been removed. Davides also noted an expectation for the company’s market-share gains to accelerate into 2026.

Option Care Health has 11 analyst ratings, with 10 recommending “buy” versus one “hold,” according to MarketWatch. The average target price of $38.80 per share implies upside of 38.5% from the last close.

The AI translation of this story was reviewed by a human editor.