Nobilis Health short-squeeze could send stock much higher, says Mackie

Now that Nobilis Health’s (Nobilis Health Stock Quote, Chart, News: TSX:NHC) long-anticipated third quarter results turned out to be “much ado about nothing”, the path is cleared for a short squeeze to begin on the stock, says Mackie Research Capital analyst Russell Stanley.

Yesterday, Nobilis reported its Q3, 2015 results. The company earned (U.S.) $13.31-million on revenue of $52.5-million, an 205 per cent increase over the $17.2-million topline the company reported in last year’s third quarter.

“The third quarter proved to be our strongest quarter so far with $52.5-million in total revenue and $10.9-million in net income attributable to Nobilis. Year to date through the end of the third quarter, we achieved $139.2-million in total revenue and $6.0-million in net income attributable to Nobilis,” said CEO Harry Fleming. “I believe the results of our third quarter showcase management’s ability to execute on operations amid healthy YTD growth. Our growth this year is proving management’s belief that direct to consumer marketing and strategic partnerships can drive growth. We believe that 2015 will finish strong and we look forward to carrying this momentum into 2016.”

Before market open on Wednesday, Stanley said he expected a significant rebound in shares of Nobilis to begin immediately. He says that with a total short position of 7.7 million shares as of December 15th, a “significant” short squeeze is a strong possibility with Nobilis.

“Uncertainty has dogged the stock for several months, and since November, that uncertainty can be attributed to the delayed reporting of Q3/15 financials,” said the analyst. “The release of complete financial statements, along with confirmation that prior period adjustments were immaterial should be a major lift to the stock.”

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 268 per cent at the time of publication.

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