Our $1 target price contemplates a 0.5x medical margin multiple on our FY26 medical margin estimate. This is a 1.5x discount to where AGL has traded over the past 2 years which we think is warranted given more risk scoring and utilization uncertainty and ACO REACH headwinds expected in 2026.  

We rate AGL High Risk given utilization, risk scoring, and regulatory pressures. 

Other downside risks to our target price being achieved include:
• Wage inflation
• Failure to retain and recruit physicians
• Inability to keep medical costs low
• Patient leakage from competition
• Retroactive trend adjustments could impact profits
• Continued negative impact of supplemental benefits
• Ownership concentration.

Risks to the upside include:
• Faster than expected risk scoring normalization
• Ability to renegotiate contracts to improve economics in 2026 and beyond 
• AGL may be an acquisition target