Goldman says this newly public obesity play can surge nearly 60%

CNBC

4 days ago

Newly public virtual care company Omada Health is a strong pick for investors seeking long-term growth, according to Goldman Sachs. Analyst David Roman initiated coverage of Omada Health with a buy rating and 12-month price target of $29. That suggests roughly 58.5% potential upside ahead for the stock, which made its public debut on the Nasdaq on June 6. "At current levels — considering the growth trajectory of the business, near-term path to profitability, and below peer valuation — we see OMDA offering compelling risk/reward," Roman wrote in a Monday note to clients. Roman is particularly bullish on Omada's clinical value proposition and growth trajectory driven by its programs. Omada employs what it describes as a "between-visit care model" to virtually support patients with chronic conditions tied to obesity— such as prediabetes, diabetes and hypertension — between their regular doctor's appointments. According to Roman, the Omada program has seen strong results from clinical and economic studies, adding to its growth trajectory and value proposition for stakeholders. The company's approach has "resulted in an engaging patient experience, robust clinical evidence which we believe will be increasingly important to employer-customer decision markers, and a strong ROI proposition that should resonate with payors," he said. Separately, Roman believes that Omada has significant room to grow given that roughly 156 million patients in the U.S. have 1 or more chronic conditions, and because the cost burden of chronic conditions in the U.S. sits at over $1 trillion annually. "The company sits within a large are growing market opportunity where there are significant unmet needs and secular drivers of growth," he said. The San Francisco-based company has seen skyrocketing growth , boasting a 57% increase in first-quarter revenue to $55 million from $35.1 million during the same period last year. Omada generated $169.8 million in revenue in 2024, up 38% from $122.8 million the previous year. Looking ahead, Roman is optimistic that Omada's partnerships with weight management program EncircleRx and CVS, along with its GLP-1 program, could drive higher revenue growth. Omada went public in early June, pricing its IPO at $19 per share. Since then, however, shares are down slightly.