QHR Corp is still undervalued, says Mackie’s Voci

Following the sale of its Enterprise Management Solutions division, QHR Corp. (TSXV:QHR) may see some short term bumps in the road, but in the long term the Kelowna-based company looks to be a growing, profitable, and high recurring revenue business, says Mackie Research Capital’s Massimo Voci.

In a research update to clients this morning, Voci reiterated his “Buy” rating and $1.75 one year target on QHR, implying 37.8% upside over Monday’s closing price of $1.27.

Last December 19th, QHR completed the $20-million sale of its EMS division to Logibec, effectively becoming an Electronic Medical Records pure-play. Voci says that while the company’s Q4 results, which are due by month’s end, could be “muddied by one-time expenses and other costs associated with the sale,” the longer picture is very bright for QHR.

Voci thinks QHR will generate Q4 adjusted EBITDA of $0.6-million on revenue of $6.2-million. He expects that this 10% margin may decline slightly in the near term, but that margins should expand with time. Voci is modeling 14% margins in fiscal 2015, a number he thinks could be accelerated by potential accretive acquisitions, which he points out that QHR is positioned to do, owing to its strong balance sheet.

Shares of QHR closed today down 4.7% to $1.21.

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