Protech Home Medical gets price target raise at Industrial Alliance

Following the company’s second quarter results, Industrial Alliance Securities analyst Chelsea Stellick has raised her target price on Protech Home Medical (Protech Home Medical  Stock Quote, Chart, News TSXV:PTQ).

On Tuesday, Protech reported its Q2, 2020 results. The company earned $1.6-million on revenue of $24.1-million, a topline that was up 16 per cent over the same period last year.

“These second quarter fiscal 2020 results showcase the resiliency of our business model, and I could not be prouder of our whole team,” said CEO Greg Crawford. “In the midst of the COVID-19 pandemic, the emphasis on the need for in-home health care has been magnified, and robust industry tailwinds have developed as a result. We believe this pandemic has underscored the importance of Protech’s mission going into the future, and as a dynamic home health care provider, we are ready to seize on these industry forces. These financial results are affirmation of the strength and resilience of our operations during this crisis, as we continue to serve the escalating needs of our patients and of our referring physicians while ensuring the protection of our front-line employees.”

Stellick says PTQ is seeing COVID-19 tailwinds as the need for in-home healthcare increases.

“Yesterday, after market close, PTQ announced its Q2/F20 results which came as no surprise following the Company’s guidance in April. Revenue of $24.1M (iA: $24.0M) increased 16% YoY as the Company realized synergies from the acquisitions of Cooley Medical Equipment and Acadia Medical Supply in Q1/F20,” the analyst noted. “As the demand for in-home healthcare increases, PTQ has responded diligently by increasing its inventory purchases to backstop any supply chain issues and meet the increasing demand. The Company has also leveraged its telehealth platform realizing cost savings as patients seek at-home medical attention. PTQ trades at a significant discount to its peers (~5.0x vs. ~13.0x F2020E EV/Adj. EBITDA), which we believe is unwarranted given its strong track record of successfully improving profitability; as such, we apply a 12.0x multiple (previously 11.0x) on our F2020 Adj. EBITDA forecast resulting in an increase to our target price to $2.60. We maintain our Buy Recommendation.”

Stellick thinks Protech will post Adjusted EBITDA of $18.9-million on revenue of $97.1-million in fiscal 2020. She expects those numbers will improve to EBITDA of $20.4-million on a topline of $107.3-million the following year.