Paradigm Capital raises price target on QHR to $2.25

A pair of recent moves from Kelowna-based QHR (QHR Stck Quote, Chart, News: TSXV:QHR) has Paradigm Capital analyst Christopher Lam raising his price target on the stock.

On Friday, QHR and Telus announced they would collaborate on a Canada-wide open-communication solution that is intended to help in excess of 23,000 physicians use electronic medical records. The day before, the company announced it had reached an agreement to acquire PatientPrep, a product that captures and summarizes essential health information before the patient sees the physician, from TrueVation Technologies for $500,000.

Lam says together the actions signal that QHR, which has acquired more than a dozen companies, will remain standing when the dust settles on the Canadian EMR space.

“PatientPrep signals the adoption of a new business model whereby QHR is acquiring innovative “bolt-on” products from other markets and providing immediate national distribution,” says the analyst. “Distribution is where many healthcare IT products fail and we believe that the QHR system may be an ideal platform to support disruptive innovation. In our view, the Canadian EMR industry is quickly heading toward an oligopoly and that QHR’s collaboration with TELUS provides a preview into who will be left standing. The choice of cross-selling products highlights relative competencies as the two industry leaders carve out competitive market niches. Additionally, communication collaboration should drive increased adoption of QHR and TELUS products while further marginalizing smaller competitors.”

In a research update to clients today, Lam maintained his “Buy” rating on QHR, but raised his one-year price target on the stock from $2.10 to $2.25, implying a return of 26 per cent at the time of publication.

Disclosure: Nick Waddell owns shares of QHR and the company is a sponsor of Cantech Letter.

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