Patient Home Monitoring is "Significantly Undervalued", says Mackie

Following Patient Home Monitoring’s (Patient Home Monitoring Stock Quote, Chart, News: TSXV:PHM) first quarter results, Mackie Research Capital analyst Russell Stanley continues to believes the company’s stock is cheap.

Today, PHM reported its first quarter results. The company posted revenue of $40.2 million, adjusted EBITDA of $7.7 million and operating cash flow (before working capital) of $9.1 million or $0.03 per share.

“The first quarter results show yet another record in top line revenues for the company and a sequential increase in our margins as we continue to integrate our business units,” said CEO Casey Hoyt in a preview of the result, released Wednesday. “We will certainly see the benefits of our organic growth strategy over time as we continue to make significant operational improvements in our business. We continue our strategy to focus on the high margin products while eliminating products that have reached the end of their profitability life cycle. With our organic growth strategy, we are more focused on profits and will reduce our focus on revenues.”

Stanley says the results were essentially in-line with his expectations, but were important because they cleared up some confusion about the company’s current cash and debt positions. He says the rapid pace of PHM’s acquisitions has created some uncertainty about these numbers, but the quarter end positions of cash and equivalents of $24.3 million, compared to total debt of $13.2 million, should be regarded as a strong balance sheet, he says.

Overall, the analyst was happy with the quarter.

“While adjusted EBITDA was slightly below management’s preliminary estimate, it was in line with our forecast,” says Stanley. “Complemented by stronger-than-expected operating cash flow, we view these results positively.”

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 178 per cent at the time of publication.

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