Shares of Talkspace Inc ( TALK ) have been climbing after the company announced a partnership with Amazon.com Inc's ( AMZN ) Amazon Health Services and are up more than 46% year to date.

The company is likely to generate revenue growth of 20%-25% with continued margin expansion, according to KeyBanc Capital Markets.

Analyst Steve Dechert initiated coverage of Talkspace ( TALK ) with an Overweight rating and a price target of $4.50.

The Talkspace Thesis: The company credits its revenue growth to transitioning away from consumer cash pay and into payor networks. Dechert says it’s a"key part of its story.”

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Talkspace's ( TALK ) acceptance of insurance boosts patient retention, lowers customer acquisition costs (CAC) and reduces volatility in consumer spending trends, he added.

Scale and operating leverage are likely to result in continued margin expansion, the analyst stated.

"TALK remains on track toward its goal of having all 50 states live with Medicare coverage by YE24 as it was CMS-approved in ~40 states and live in 30 as of October," he further wrote.

The company's Direct-to-Enterprise (DTE) business is also likely to generate revenue growth, "driven by demand across a diverse set of enterprises, including cities, municipalities, and employers," Dechert further said.

Price Action: Shares of Talkspace ( TALK ) had risen by 2.35% to $3.57 at the time of publication on Monday.

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