Cantor Fitzgerald raises target on QHR Technologies to $1.20

Cantor Fitzgerald analyst Tom Liston says QHR Technologies’ (QHR Technologies Stock Quote, Chart, News: TSX:QHR) recurring revenue provides a great foundation for the company’s future growth.

This morning, QHR reported its Q1, 2013 financials. The company earned $182,445 on revenue of $8.4-million, a 14% increase over the same period last year.

CEO Al Hildebrandt said he was happy with the company’s progress.

“We are pleased to report continued improvement in both our EBITDA and EBITDA margin, quarter over quarter,” he said. “Our recurring revenue is now at 72 per cent of total revenue. Delivering this solid gain in recurring revenue will continue to give QHR a strong base for growth. The investments being made in our revenue cycle management division (the Open EC acquisition) are gaining traction and delivering the results that we anticipated.”

Liston says that QHR’s electronic medical records revenue growth, which was up 38% year-over-year, was higher than he expected. This helped the company top his overall revenue expectation for the quarter, which was $7.6-million, and the company’s adjusted EPS was $0.02, bested the Cantor Fitzgerald analyst’s forecast of $0.01. In a research update to clients this morning, Liston maintained his BUY rating on QHR Technologies, but raised his one-year target price by a dime, to $1.20.

QHR Technologies, which is beginning to enter the U.S. market, has become an aggressive consolidator in the Canadian electronic medical records space. Last summer’s acquisition of Open EC Technologies was the company’s twelfth in just nine years. QHR’s success mirrors larger trends: a recent report from MarketResearch.com said the U.S. EMR market is expected to grow from $2.17-billion in 2009 to more than $6-billion in 2015; an estimated compound annual growth rate of 18.1%.

Liston’s target price is based on 12x his expectations for QHR’s fiscal 2014 earnings.

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