R1 RCM, Health Catalyst downgraded as KeyBanc reviews health-tech space

R1 RCM (NASDAQ:RCM) and Health Catalyst (NASDAQ:HCAT) traded lower on Wednesday after KeyBanc Capital Markets downgraded the stocks as it reevaluated its coverage of the healthcare IT space ahead of Q1 earnings.

However, the firm upgraded GoodRx Holdings (NASDAQ:GDRX) and Certara (NASDAQ:CERT), naming the duo among the favorites heading into the earnings season alongside Phreesia (PHR) and Schrödinger (SDGR).

“Our favorite names into 1Q earnings are CERT, GDRX, PHR, and SDGR, where we see the biggest opportunities for beat-and-raises this quarter and throughout the year,” KeyBanc analyst Scott Schoenhaus wrote.

Based on credit card data, he argued that the utilization trends across the healthcare system are moderating compared to the start of the year amid the disruption caused by the recent cybersecurity incident at UnitedHealth’s (UNH) Change Healthcare unit.

“Even if utilization softens only marginally, we see potential risk to margins for hospitals,” Schoenhaus argued, citing strong employment data in healthcare and near-term labor challenges from the Change Healthcare-related disruptions.

Schoenhaus downgraded hospital-focused names R1 RCM (RCM) and Health Catalyst (HCAT) to Sector Weight from Overweight to reflect these risks.

The analyst upgraded GoodRx (GDRX) to Overweight from Sector Weight with a price target of $9 based on positive data trends, including those related to monthly active customers,

With a $23 per share target, Schoenhaus issued a similar upgrade on Certara (CERT), citing comments from its peers in the biosimulation industry to suggest positively developing biotech end markets.