WELL Health Technologies Corp (TSX:WELL, OTCQX:WHTCF), a digital health company that operates clinics in Canada and the United States, has earned a price target bump from analysts at PI Financial.
In a note to clients, the analysts reiterated their ‘Buy’ rating for the stock and upped their price target to C$7.50 from C$7, based on their new valuation methodology.
WELL’s Toronto-listed shares are currently trading at about C$3.85.
READ: WELL Health Technologies’ fast and profitable healthcare growth should pay off, says Stifel GMP
“On a multiple basis, our C$7.50 target price equates to an EV/Sales of 1.8x and 1.6x on our FY23 and FY24 estimates, respectively,” the analysts wrote, noting that peer valuations ranged from 1.6x for healthcare services peers to 2.4x for healthcare technology peers based on FY24 revenue estimates.
The analysts highlighted that WELL has a strong history of outperforming consensus earnings estimates, having beat consensus revenue projects in the last 16 reported quarters. The company is expected to report its 4Q earnings in mid to late march.
“Management increased its FY22 guidance in November from C$560 million to C$565 million which would indicate that 4Q revenue will be C$152 million,” they wrote.
“We are forecasting 4Q revenue of C$153 million but, if the past is any indication, revenue will likely come in higher.”
PI Financials’ analysts also noted the company’s strong track record of acquisitions, with WELL completing six acquisitions in 2019, six more in 2020, and 15 acquisitions in 2021.
“Last year only three deals were completed, but we expect the acquisition strategy will continue this year,” they wrote. “We believe that, based on an improving market and the company's strong financial position, WELL is in a good position to make a large acquisition in 2023.”
Another catalyst for the company is recently announced increases in Canadian healthcare funding, the analysts pointed out.
“WELL is positioned to benefit from these initiatives whether it is through the promotion of digitization of the Canadian healthcare system or greater access to healthcare for Canadians through its large network of specialty clinics,” they wrote.
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