CRRX stock is a buy, Desjardins says

Ahead of the company’s third quarter results, Desjardins analyst Gary Ho has maintained his “Buy” rating on CareRX Corporation (CareRX Corporation Stock Quote, Chart, News, Analysts, Financials TSX:CRRX).

On November 8, prior to the market open, CRRX will report its Q3, 2023 results.

The analyst gave his takeaway on what he expects from the third quarter.

“CRRX reports before market on November 8. We slightly lowered our 3Q revenue and EBITDA on a flattish bed count while keeping margin unchanged,” he said. “With labour showing early signs of improvement (reduced overtime and vacancy rates), we slightly increased our 2024 EBITDA margin estimate while still being more conservative than management’s target of 10% exiting 2024.”

In a research update to clients October 20, Ho maintained his “Buy” rating but trimmed his price target on CRRX from $3.75 to $3.50, implying a return of 122.9 per cent at the time of publication.

Ho thinks the company will post Adjusted EBITDA of $28.7-million on revenue of $376-million in fiscal 2023. He expect those numbers will improve to Adjusted EBITDA of $34.4-million on a topline of $387-million in fiscal 2024.

Our target goes to C$3.50 (was C$3.75) from rolling our valuation forward, offset by a lower multiple on peer contraction. At 4.3x 4QF EBITDA vs 6.3‒10.5x historically, CRRX is attractively valued,” the analyst concluded.