A Game-Changing Deal May Flip the Script For This Understated Stock

Forbes

24-07-2025

Waystar (NASDAQ: WAY), a provider of cloud-based software for healthcare payments, is worth watching for several compelling reasons ahead of its upcoming earnings:
Waystar Overview
Waystar serves around 30,000 clients. Its enterprise-grade platform processes over 6 billion healthcare payment transactions annually, including over $1.8 trillion in annual gross claims and spanning approximately 50% of U.S. patients.
Why Is Waystar Stock Worth Watching?
Catalyst 1: Acquisition That Could Be a Gamechanger
Waystar has agreed to acquire Iodine Software in a $1.25 billion, 50/50 mix of cash and stock deal. Iodine Software provides AI-powered clinical intelligence software to eliminate revenue leakage, lower administrative burden, and ensure accurate reimbursement.
Waystar notes that up to 60 million claims are denied each year due to administrative errors, costing U.S. healthcare providers billions in lost revenue. Public frustration with denied claims reached a flashpoint last year following the high-profile news involving a UnitedHealth executive, underscoring a broader systemic issue. The Iodine acquisition positions Waystar to address this pain point at a time of heightened awareness around administrative inefficiencies in healthcare.
The deal is expected to close by the end of 2025. Post-acquisition, Waystar will own 92% of the combined company, with Iodine shareholders holding the remaining 8%. Advent, Iodine's largest shareholder, will receive only Waystar shares in connection with the transaction and will agree to a lock-up period of 18 months after the deal closes. A lock-up clause in deals typically aims to protect the buyer's interests, by preventing early share sales by key stakeholders.
Waystar is scheduled to report Q2 results on July 30 after market close and and its preliminary revenue guidance is already ahead of expectations:
Catalyst 3: Compelling Relative Valuation
A PEG ratio below 1 typically signals that a stock may be undervalued relative to its earnings growth. Waystar trades at a forward PEG of 0.67, which is attractive in isolation—but even more compelling when compared to the sector average of 1.82, representing a 63% discount. Even a modest rerating to a PEG of 0.81 would imply 20%+ upside, based on conservative assumptions.
Bottom Line
With a high-quality acquisition on deck, potential for upward revenue revisions, and a significant valuation gap to peers, Waystar appears well-positioned for a rerating, but execution will be key.