Expanding Opmedic Group is still undervalued, says Industrial Alliance analyst Li

Opmedic Group (Opmedic Group Stock Quote, Chart, News: TSX:OMG) is beginning to solidify its presence outside of Quebec, says Industrial Alliance analyst Steve Li.

On Tuesday, Opmedic announced the acquisition of a majority stake of Heartland Medical Corporation and Heartland Fertility and Gynecology Clinic.

CEO Dr. Pierre St-Michel said the deal was in keeping with the company’s desire to expand, geographically.

“With the acquisition of Heartland, a well-established fertility clinic in the city of Winnipeg, Opmedic Group continues to implement its strategic plan to expand its fertility services activities outside Quebec,” he said. “We are looking forward to work with a dynamic team of doctors in Winnipeg and will continue to pursue growth opportunities outside of Quebec.”

Li notes that Heartland’s fertility clinic is Opmedic’s third location outside Quebec and its first in Manitoba. He says he likes the deal because the clinic is located on prime real estate near clinics and pharmacies. What’s more, Manitoba’s reimbursement model for infertile couples is attractive, with a 40% tax credit for fertility treatments in the province for up to $8,000, a 15% federal tax credit, and a 10.8% provincial medical expense credit.

In a research update to clients this morning, Li reiterated his STRONG BUY rating and $3.00 one-year target on Opmedic Group, implying a potential return of 27%, including dividends.

Shares of Opmedic Group closed today even at $2.42.

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