Shares of Patient Home Monitoring (TSX:PHM) were under pressure today after the company issued a press release that said its fourth quarter expenses would be higher than usual. But Mackie Research Capital analyst Russell Stanley says the news is only a “slight negative” that doesn’t affect the company’s long-term upside.
PHM CEO Casey Hoyt today was focused on next year’s first quarter and beyond. The company says it expects next year’s Q1 to be a record quarter.
“We are enthusiastic about offering new products and services to our growing list of patients and referring professionals,” said CEO Casey Hoyt this morning. “The MSO initiative is particularly exciting in that we can improve the financial impact for certain referring physician groups to improve patient care. This will give them an added incentive to enroll patients in money-saving home health care solutions with PHM. We continue to be focused on improving services offered to patients, increasing our geographic footprint and growing our business through a dual-pronged approach of organic growth and accretive acquisitions,” continued Mr. Hoyt. “I am optimistic that 2016 will be a record year in terms of revenues and profits.”
Stanley says he believes the costs that PHM mentioned are already modeled into his current fourth quarter estimates, noting that PHM has guided to a normalized adjusted EBITDA margin of between 23 and 28 per cent. By applying the mid-point range of 25.5 per cent against his revenue estimate of $27-million, he says, the resulting $2.1-million in EBITDA already reflects $4.8-million in additional expenses.
The analyst believes the company’s fourth quarter will soon be forgotten in the face of what he believes is a current share price that significantly undervalues the company relative to its comparables.
“As of writing, the stock is off 5%,” says Stanley. “We attribute this to the absence of preliminary results in today’s press release, as well as a negative reaction to management’s comments regarding Q4 expenses. As noted, we believe those expenses are already reflected in our estimates.”
In a research update to clients today, Stanley maintained his “Buy” rating and one-year target price of $1.25 on Patient Home Monitoring, implying a return of 108 per cent at the time of publication.
Leave a Reply
You must be logged in to post a comment.