Nobilis Health’s third quarter results will de-risk the stock, says Mackie

Nobilis Health’s (Nobilis Health Stock Quote, Chart, News: TSX:NHC) third quarter results are expected shortly, and Mackie Research Capital analyst Russell Stanley says they will de-risk the stock.

On November 11, Nobilis announced it would delay its third quarter earnings report, but released preliminary results that said EBITDA would come in at $9-million and revenue at $50.1-million, 191 and 373 per cent gains, respectively, over the same period last year.

“The issues remaining under review should not result in material changes to the preliminary revenues and preliminary adjusted EBITDA announced today as those are primarily non-cash items,” said CEO Chris Lloyd.

Stanley says the results should “de-risk” the stock and move the focus back to the company’s business, where he sees immediate M&A opportunities.

“NHC continues to evaluate multiple acquisition opportunities, and it remains significantly underlevered relative to its peers,” says the analyst. “With several distressed asset-type purchases under its belt, management has shifted its focus to targets that would make a more immediate contribution to EBITDA. This includes individual facility acquisitions, as well as larger, multi-facility portfolio transactions.”

Stanley says he believes Nobilis is also undervalued compared to its peers.

In a research update to clients today, Stanley maintained his “Buy” rating and one-year target price of $12.50 on Nobilis Health, implying a return of 264 per cent at the time of publication.

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