Dentalcorp is a buy, Desjardins says

Ahead of the company’s second quarter results. Desjardins analyst Gary Ho remains bullish on Dentalcorp Holdings (Dentalcorp Holdings Stock Quote, Chart, News, Analysts, Financials TSX:DNTL)

On August 4, before the market open, DNTL will report its Q2, 2023 results.

Founded in 2011, Toronto-based Dentalcorp owns a growing network of dental practices.

“We have largely maintained our 2Q forecasts, and expect DNTL to track well vs guidance announced in May,” Ho said. “With the NCIB in place, management is looking at a balanced approach to capital allocation between acquisitions, deleveraging and buybacks. Repurchase activity in 2Q gives us confidence in share valuation.”

In a research update to clients Tuesday, Ho maintained his “Buy” rating and one-year price target of $12.50 on DNTL, implying a return of 70.1 per cent at the time of publication.

The analyst thinks Dentalcorp will post Adjusted EBITDA of $263-million on revenue of $1.4-billion in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of $296-million on a topline of $1.6-billion the following year.

“We view DNTL as a quality compounder given its (1) proven M&A playbook in a fragmented market; (2) organic growth outlook; (3) proprietary technology; (4) compelling financial profile with resilient top-line growth and growing cash flows; and (5) recession-resistant attributes,” Ho added.