Down more than 20% on the year, Catamaran (TSX:CCT) is a compelling opportunity, says Cantor Fitzgerald Canada analyst Justin Kew.
For the past four years, the trajectory of the company formerly known as SXC Health has been decidedly up. But since peaking at $57.47 on February 14th, the stock has significant lost ground, and its TSX listing is now trading in the mid-forties.
Kew says the recent downturn brings Catamaran in-line with peers Express Scripts and CVS, but thinks Cataman deserves to trade at a premium to those stocks because it has a higher growth profile. In a research update to clients this morning, Kew maintained his “Buy” rating and (U.S.) $52 (Canadian: $56.90) one-year target on Catamaran.
The Cantor Fitzgerald analyst says his investment thesis remains unchanged. Catamaran, he says, is a well run company with good management that is in a sector with many positive tailwinds. He believes that the company will continue to grow its market share at the expense of its two larger competitors.
Kew believes Catmaran’s topline growth will continue to be in strong double-digit territory. He thinks the company’s revenue will grow from $14.78-billion in fiscal 2013 to $20.62-billion in 2014, and then to $23.73-billion the following year. He notes that his estimates do not include the benefit of acquisitions, which could mean even more upside.