Bank of America analyst Allen Lutz recently identified Waystar as his top pick for 2026, writing in a report that the company holds a unique position where high-growth software meets the healthcare industry's significant administrative challenges. "The earnings multiple should expand as growth proves to be durable," Lutz stated.
The firm's bullish outlook on Waystar, despite the stock facing pressures and declining 20% over the past year, is based on the view that its growth is "too cheap" to ignore. Lutz noted that Waystar experienced a period of "deal purgatory" after its $1.25 billion acquisition of Iodine software in late 2025, with full operational integration only recently beginning.
Concerns persist that UnitedHealth's Optum might regain market share lost during the 2024 Change Healthcare cybersecurity attack, an event that caused severe cash flow issues and delayed patient care for U.S. hospitals. "Hospitals are looking for new revenue cycle vendors due in part to Change Healthcare's cybersecurity breach," Lutz wrote. "And the rapid growth of AI is also driving hospitals to make changes to its platform."
This shift is creating opportunities for what Lutz described as "differentiated" players like Waystar to gain ground. The company has maintained an aggressive consolidation strategy since its formation in 2017, executing more than 10 acquisitions and now processing over 7.5 billion transactions annually. Lutz estimated this strategy could unlock 400 to 500 basis points in margin upside as Waystar integrates AI and scales, leading Bank of America to issue a Buy rating with a $52 price target.
William Blair analyst Ryan Daniels referred to the AI-centric value proposition as a move toward an "autonomous revenue cycle." "AI has the potential to revolutionize myriad revenue cycle management functions, which could reshape market dynamics," Daniels said. He argued that Waystar is positioned to benefit, specifically citing its "AltitudeAI" tool designed to address the industry's $20 billion denial problem. Management claims the software can generate denial appeals 90% faster, reducing a 38-hour manual process to just two hours.
While highlighting Waystar, Daniels also pointed to Phreesia and Health Catalyst as key players, though they operate on different scales and specialties. As AI permeates the sector, Daniels noted the ultimate goal may involve displacing manual labor in a legacy industry. In Waystar's case, the company suggested its AltitudeAI tool is equivalent to redeploying 13 full-time employees to "higher-value work."
Waystar CEO Matthew Hawkins has been vocal about the company's AI ambitions. "We monetize AI through retention, annual price uplifts, and introducing new SKUs," Hawkins told investors during the company's Q3 earnings call last October. "AI is integrated into our platform to enhance productivity and client satisfaction, driving sustainable growth." Hawkins also noted that pressure points, including data fragmentation, trustworthy cybersecurity systems, and increased competition, continue to limit AI's immediate effectiveness.