Optima Health PLC (AIM:OPT) is a ‘safe-haven’ for investors in the health sector and the shares appear to offer ‘particularly good value’, according to Panmure Liberum.
The stockbroker has upgraded its price target and repeated a ‘buy’ recommendation, following Optima’s latest acquisition – a deal today to pick up Irish occupational health provider Cognate Health.
Pitched at 212p, up from 208p, the Panmure Liberum price target implies substantial upside to the current market price of 171.35p.
“The second EBITDA accretive transaction post demerger, this is in line with the Optima strategy to expand its market leadership both organically and through M&A,” Panmure Liberum analyst Julie Simmonds.
“The company is unaffected by both tariffs and changes at the FDA which add risk to other investments in the sector.”
She added: “Cognate is one of three major providers of occupational health services in the region, providing both in-person and remote services across the whole range of OH.”
Simmonds highlighted that Cognate has a slightly different model to Optima, as it also has a network of qualified physicians operating from local medical practices rather than its own sites.
“This is a more flexible model enabling services to be provided in small towns and rural locations, and not requiring clinicians to be employed full time,” the analyst explained.
She, meanwhile, noted that the combination will more likely favour growth and opportunity through cross-selling rather than through ‘synergies’ as the respective businesses won’t be deeply integrated; instead, Cognate will be run as a division of Optima.
It’s a significant milestone
"The acquisition of Cognate is a significant milestone for Optima, providing the company with access to a new geographic market,” said chief executive Jonathan Thomas.
Cognate, an occupational health provider, last year generated €7.37 million and made a €0.86 million pre-tax profit. It has 30 clinic sites, approximately 60 employees, and a network of 35 occupational physicians.
“Cognate's business is strategically aligned with ours, with a focus on occupational health services to improve health and wellbeing in the workplace.”
Thomas added: “We look forward to integrating the businesses and benefiting from the significant additional clinical capabilities, and revenue synergies, as we continue to evaluate further value-enhancing bolt-on opportunities in the market."
Optima meanwhile highlighted that it continues to believe there are significant opportunities to accelerate growth and will continue to evaluate bolt-on acquisitions and consolidation in the market.