BMO Capital this week trimmed its price target on Waystar Holding (NASDAQ:WAY) to $30 from $47 but left the stock's rating at Outperform. The new target reflects a lower valuation multiple - roughly 12 times 2027 EBITDA - a shift the firm attributed to widespread uncertainty about how artificial intelligence will reshape software industry valuations.
At the time of the note, Waystar shares were trading at $24.31, having declined about 46% over the past year and sitting roughly 51% below their 52-week high of $48.11. Data cited by InvestingPro indicates the shares appear undervalued relative to their Fair Value.
Fundamentally, Waystar delivered a strong quarter. Fourth-quarter revenue and EBITDA topped consensus estimates by 3.0% and 6.9%, respectively. The company provided initial guidance for 2026 EBITDA that came in 0.4% ahead of expectations on revenue that was in line with forecasts. Over the last twelve months, Waystar's EBITDA totaled $391.95 million and revenue reached $1.1 billion, representing year-over-year growth of 16.5%.
BMO reduced both its target price and the valuation multiple applied to Waystar, bringing that multiple to about 12 times projected 2027 EBITDA. The research team emphasized that the change stems from uncertainty about AI's net impact across software firms rather than deterioration in Waystar's execution. Indeed, BMO noted the company delivered strong fourth-quarter execution - an assessment that mirrors InvestingPro's view of Waystar's overall financial health as "GREAT" and its reported 68.3% gross profit margin.
Analysts at BMO also pointed to a disconnect between Waystar's operating profile and the market multiple at which the stock is trading. The company currently trades at roughly 10 times EBITDA, compared with the 12 times multiple BMO applied to its 2027 estimate, and a PEG ratio of 0.16. Those metrics were cited as evidence that the shares may be significantly undervalued relative to the company's growth trajectory.
Other broker-dealer activity highlighted differing interpretations of the same results. Following Waystar's fourth-quarter outcome - which included revenue of $304 million, a 24% increase year over year, and earnings per share of $0.36 that beat expectations - Freedom Capital Markets upgraded Waystar from Hold to Buy while revising its price target to $33.00 from $40.00. At the same time, Citizens trimmed its price target to $34 from $48 but kept a Market Outperform rating, reflecting industry-wide multiple compression; that revised target was calculated using a 15x multiple against a new 2026 EBITDA estimate of $533 million.
The juxtaposition of solid operating performance and lower implied market multiples underscores the current tension in software and healthcare technology stocks as investors weigh potential upside from AI against uncertainty about how quickly and unevenly benefits will materialize. InvestingPro's commentary and metrics are cited alongside these analyst actions, with the platform offering a dedicated research report on Waystar and additional ProTips for investors.
Investors and market participants will be watching whether the sector-wide valuation shift tightens or eases as companies provide clearer evidence of AI-driven improvements to margins or revenue efficiency. For now, analyst views diverge: several firms acknowledge Waystar's execution and growth while adjusting targets to reflect a more cautious valuation environment.
Summary
BMO Capital lowered its price target on Waystar to $30 from $47, keeping an Outperform rating and citing AI-related valuation uncertainty across the software sector. Waystar reported fourth-quarter results and initial 2026 EBITDA guidance that beat consensus, and reported strong trailing EBITDA and revenue growth. Other analysts made offsetting moves - upgrading or trimming targets - reflecting mixed sentiment amid sector multiple compression.
Key points
- BMO cut Waystar's target to $30 from $47 and reduced its valuation multiple to about 12 times 2027 EBITDA, while keeping an Outperform rating.
- Waystar beat fourth-quarter revenue and EBITDA estimates by 3.0% and 6.9%, respectively; Q4 revenue was $304 million, up 24% year over year, and EPS was $0.36.
- Sectors impacted include healthcare technology and enterprise software - both face valuation pressure tied to uncertainty over AI's industry-wide effects.
Risks and uncertainties
- Ongoing uncertainty about how artificial intelligence will influence software sector valuations - this is the central reason BMO lowered its multiple and target.
- Broad multiple compression in the software sector - exemplified by Citizens' lower target and its use of a 15x multiple against a revised 2026 EBITDA estimate of $533 million.
- Market valuation lagging underlying fundamentals - despite strong execution and a low PEG ratio of 0.16, Waystar's trading multiple is nearer to 10 times EBITDA, indicating potential investor reluctance until AI outcomes become clearer.