It should be steady as it goes for pharmacy services company CareRx (CareRx Stock Quote, Charts, News, Analysts, Financials TSX:CRRX) now that it’s made a change at the helm. That’s the prognosis from Desjardins Capital Markets analyst Gary Ho, who maintained a “Buy” rating on the stock in a Monday report.
CareRx, which serves over 94,000 residents in over 1,600 seniors and congregate care communities through its network of pharmacy fulfillment centres, announced on Monday that President and CEO David Murphy would be stepping down from both roles as well as from his board position, effective May 31 of this year. The company said current COO Puneet Khanna would be taking over the President and CEO duties and will be nominated as a director at the company’s upcoming AGM in June.
In the press release, Chairman of the Board Kevin Dalton said under Murphy’s stewardship CareRx established itself as the leading provider of pharmacy services to Canadian seniors, effectively tripling the size of its business and making transformational acquisitions along the way.
On Khanna’s promotion, Dalton said, ”The Board has the utmost confidence in Puneet to lead CareRx in the next chapter of its growth story. Puneet has extensive executive leadership experience, including as a CEO, and is widely respected across the long-term care and pharmacy sectors. Under his leadership, and with the support and strength of the CareRx management team, I have no doubt that the transition will be seamless.”
Commenting on the development, Ho said it came as a surprise but that he was comforted by the selection of an internal candidate to replace Murphy. On the whole, the analyst judged the impact of the move to be neutral.
“We do not expect any financial hiccups related to the management transition in the upcoming 1Q results. Mr Khanna has been integral to recent M&A acquisitions and integrations. We do not expect any meaningful change to CRRX’s current strategy—as previously communicated, CRRX expects M&A to slow down (only tuck-ins) as it focuses on labour and organic growth,” Ho wrote.
With his “Buy” rating, Ho also maintained a 12-month target price of $4.25 per share, which at press time represented a projected return of 77.1 per cent.
Over the past year and a half, CareRx’s share price has dropped from the $6-$6.50 range to now the $2-$2.50 range.
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