PINC – Management is confident about Stanson Health, bundled payments, and sales growth, which coupled with overly bearish market expectations, suggests that upside remains warranted

• Premier Inc. (PINC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 10.2x Uniform P/E. At these levels, the market is pricing in expectations for the firm to see historically low profitability, but management is confident about the Stanson Health acquisition, bundled payments, and revenue growth across segments
• Specifically, management is confident in the capabilities of Stanson’s data solutions, and their ability to differentiate themselves through the Stanson acquisition. Additionally, they are confident in their bundled payments strategy, and revenue growth across segments, particularly in their Supply Chain Services segment. Finally, they are confident about the need for affordable specialty pharmaceuticals, specifically in ambulatory settings
• Given management’s positive sentiment, market expectations for Uniform ROA compression appear far too bearish, and as such, multiple expansion and equity upside continue to be warranted