Medtech Claritev soars after upbeat Piper Sandler update

Shares of healthcare technology and data company Claritev Corporation surged nearly 35% yesterday after investment bank Piper Sandler upgraded its recommendation on the stock and raised its target price. Despite a string of lawsuits and declining revenue, the company is attracting new clients and renewing contracts with existing ones.

Claritev jumped 34.8% on the New York Stock Exchange yesterday, May 29, to close at $35.90 per share, its highest closing mark in more than a year. In premarket trading today, the stock has inched about 0.5% lower, as of this writing.

The rally came against the backdrop of a coverage update by Piper Sandler, which raised its recommendation on Claritev shares from “neutral” to “overweight” and more than doubled its target price from $19 to $44 per share, 19% above yesterday’s closing price.

The upgrade followed Claritev’s first-quarter earnings, in which the company posted a 1.4% year-over-year drop in revenue to $231.3 million. Nevertheless, Claritev confirmed its full-year revenue guidance and expressed confidence about a return to top-line growth in the coming quarters.

Piper Sandler’s upgrade was based on several key developments, as reported by Investing.com: the confirmed guidance, a three-year contract extension with insurer Elevance Health, and the establishment of strategic commercialization partnerships. Among Claritev’s new partners are Oracle, healthcare analytics provider J2 Health, and UAE-based medical services provider Burjeel Holdings. Piper Sandler believes this should help mitigate the company's customer concentration risk.

Year to date, Claritev shares have risen 143%. According to MarketWatch, the stock has only three coverage analyst ratings: two “buys” and one “hold.” The average target price is $31.30 per share, which is below the stock’s current market price.

Claritev provides data analytics and technology-enabled cost management, payment, and revenue integrity solutions to the U.S. healthcare industry. It helps reduce medical costs by detecting claim over-charges, optimizing reimbursement, and managing provider networks.

Previously known as MultiPlan, the company changed its name to Claritev and its ticker from MPLN to CTEV in February.

The rebranding came amid a wave of lawsuits from the American Medical Association, healthcare provider Community Health Systems, nonprofit AdventHealth, and others. They allege that Claritev colluded with insurers to artificially suppress reimbursement rates, depriving healthcare providers of tens of billions of dollars annually, according to Becker’s Hospital Review.

Claritev denies the allegations, claiming the lawsuits are “without merit and would ultimately increase prices for patients and employers.”