A strong balance sheet and a high level of recurring revenue protect QHR Corp’s (TSXV:QHR) downside, but the market is not fully valuing its potential, says Haywood analyst Massimo Voci.
In a research report to clients this morning, Voci initiated coverage of QHR with a “Buy” rating and one-year target of $1.80, implying a return of 53% at the time of publication.
Voci says now that most of the customer base QHR acquired from its numerous acquisitions have transitioned to the company’s core Accuro offering, he believes the company will now focus on “greenfield” opportunities, and to taking business away from other platforms. The analyst says the company is at an “eat” or “be eaten” crossroads, meaning it is plausible that it could continue to grow through acquisition, or be acquired itself.
Voci says QHR is a natural target for Telus. The telco entered the Electronic Medical Records space by forming a new division called Telus Health and then acquiring four vendors; KinLogix, Med Acccess, PS Suite and Wolf Medical, in an 18-month period beginning October of 2012. If Telus Health continues this consolidation,” says Voci, “QHR could prove an attractive target due to its large physician base, the strength of Accuro, and its broad geographic coverage.
Noting that the stock has traded sideways for several months, Voci says he expects clarity on plans to deploy the cash on its balance sheet from QHR management at its upcoming AGM on September 16th.
Disclosure: QHR is an annual sponsor of Cantech Letter.