The stock price of Progyny (NASDAQ: PGNY), a femtech firm that specializes in fertility and family building benefits solutions, has enjoyed significant growth since its October 2019 listing – showing that the digital women’s health industry has grown into a formidable force in the wake of the Covid-19 pandemic.
Despite recent declining prices sparked in no small part by a director selling $327,285.70 in stock, Progyny was awarded an average ‘buy’ rating by the 10 brokerages covering the stock.
Many analysts have scrutinized PGNY shares in recent months. Jefferies Financial Group started coverage on Progyny in a research role in December, issuing a ‘buy’ rating and a $60 target price. Although Citigroup cut their ‘buy’ rating to a ‘neutral’ rating for the stock in November, the analysts also raised their target price for the stock from $60 to $64.
However, Zacks Investments and TheStreet recently cut their ratings for Progyny in 2022, indicating that it may be worth selling up. JPMorgan Chase & Co also lifted their price objective for the company from $65 to $79 and gave the company an ‘overweight’ rating in an October research report.
As PGNY’s stock performance history shows, the stock has climbed more than 138% following its October 2019 floatation, but investors are likely to be concerned at how the leading femtech firm has fared amidst the testing market conditions of late 2021 – with inflation and fresh Covid-19 fears paving the way for mass sell-offs.
The past six months shows that the stock has drifted some 43.26% away from its all-time high value of $63.43, which Progyny reached in September 2021.
Another contributing factor to the stock’s recent downturn has been the slightly below-par Q2 revenues in 2021. Although the company’s earnings have been better than the consensus estimates over the same period, its stock has drifted consistently since Q3 2021.
Progyny also posted its guidance for the full-year 2021 with revenues estimated to reach $520 million and EPS set to be around $0.47 at the midpoint of their range.
“Progyny’s fertility benefits solution includes differentiated benefit plan design, personalised concierge-style participant support services and a selective network of fertility specialists,” said Maxim Manturov, head of investment advice at Freedom Finance Europe. “The company also offers Progyny Rx, a comprehensive pharmacy benefits solution that gives its members access to the medicines they need during treatment. In addition, it provides employers with reimbursement programmes for surrogacy and adoption.”
Progyny reported its Q2 results last month with revenues slightly below and earnings better than the consensus estimates. The company provided its guidance for the full-year 2021 with revenues estimated to be $520 million and EPS to be around $0.47, at the mid-point of their range. The mixed results led to a gradual decline of over 20% in PGNY stock in the first half of August. However, the stock has seen a sharp recovery over the last month or so, led by an increased optimism for its business prospects.
The Rise and Rise of Femtech
The volume of companies in the United States that offer fertility benefits has experienced sustained growth in recent years as the technology powering femtech grows. Benefits plans can range from infertility diagnosis and medication to in vitro fertilization (IVF) and intrauterine insemination (IUI). Other, more comprehensive plans cover egg freezing, the procurement of donor eggs or embryos, and gestational surrogacy. In one key step for the industry, such plans have grown to incorporate members of the LGBTQ+ community, as well as single parents.
The Employee Benefits Survey 2020 by the International Foundation of Employee Benefits Plans (IFEBP) suggests that 24% of organizations now cover IVF treatment, up from just 13% in 2016. The number of organizations covering egg harvesting also increased from 2% to 10% over the same period. Likewise, fertility medication climbed threefold from 8% to 24%.
Organizations are increasingly eager to adopt fertility benefits as part of their diversity, equity, and inclusion efforts. By offering coverage for treatment and medication, they can not only develop better ESG reporting and also ensure that they can attract and retain more talent.
This heightened interest and awareness of femtech can help to accelerate growth in a fledgling industry that’s ripe for adoption.
Although VC interest hasn’t been largely forthcoming in recent years, the pandemic-driven rise of digital transformation and digital wellness has aided significant levels of exposure for women’s health applications.
Progyny may have faced significant downturns in share price in recent months, but the outlook for the femtech industry as a whole must be regarded as largely positive.
As an early trailblazer in the industry, Progyny must be regarded as a firm that possesses plenty of upside potential. As the industry grows, we can expect to see more outperformance for this leading femtech company.
