Leede Jones Gable analysts have maintained a 'Buy' rating on CareRx Corporation (TSX:CRRX) following the release of the company’s first-quarter 2022 financial results, saying the company sustains the generation of positive earnings before interest, taxes, depreciation, and amortization (EBITDA) despite some sequential softness.
The national long-term care pharmacy operator's growth trajectory remains favorable despite pending inflationary and reimbursement headwinds anticipated in future quarters, they said.
“But we stand by our view that CareRx, as the clear national leader in scale and scope in the LTC Rx services, can successfully navigate economic hurdles better than its peers and can continue to profitably grow by acquisition as it historically has to build out its existing operations,” they added.
READ: CareRx Corporation says integration of new acquisitions and organic growth led to 108% jump in 1Q revenue
The Leede Jones Gable analysts are maintaining their ‘Buy’ rating and $8.50 per share price target on CareRx, implying a one-year return of 63%.
Analysts at Stifel GMP, meanwhile, noted that CareRx’s 1Q was good and in-line, but the company’s surprise customer loss overshadowed the results.
“We continue to believe there is a lot to like about this undervalued Canadian pharmacy play,” the Stifel analysts wrote.
“The company delivers a strong track record of exceeding growth targets, holds a dominant position in an attractive market and has consistently pursued opportunities to build on its competitive advantages,” they added.
The analysts also noted that despite these attributes, CRRX shares trade at a considerable discount to peers at about 8 times versus about 13 times 2022 EBITDA estimates, while believing the company’s pursuit of lower borrowing costs is also anticipated to improve valuation and boost its share price.
Stifel GMP analysts have a ‘Buy’ rating on CareRx stock with a target price of $7.50 per share.
Contact Sean at sean@proactiveinvestors.com
--UPDATES for Stifel GMP note --