Its fourth quarter results are in the books and Echelon Capital Markets analyst Stefan Quenneville thinks there is still money to be made on Nova Leap Health (Nova Leap Health Stock Quote, Chart, News, Analysts, Financials TSX:NLH).
On March 7, Nova Leap reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $571,270 on revenue of $6.55-million, a topline that was down 3.37 per cent over the same period last year.
The analyst summarized the quarter.
“Nova Leap yesterday announced solid Q423 results that were in line with our Adj. EBITDA estimate despite missing on the top line, as the Company’s cost-saving and efficiency initiatives continued to drive improving margins. With its streamlined cost structure in place, the Company is looking to invest in sales personnel to drive organic growth and bolster this with M&A given its healthy balance sheet. We are maintaining our Buy rating and C$0.60/shr
price target on NLH. We continue to believe that the Company is undervalued given its solid position in the demographically attractive and fragmented home care market.”
In a research update to clients March 8, Quenneville maintained his “Buy” rating and one-year price target of $0.60 on NLH, implying a return of 186 per cent at the time of publication.
The analyst thinks the company will post Adjusted EBITDA of $2.0-million on revenue of $29.8-million in fiscal 2024.
“We are introducing our 2024 estimates with revenues of $29.8M and Adj. EBITDA of $2.0M, which assumes ~$2.0M in acquired revenues and represents growth of 14% y/y. We reiterate our Buy rating on NLH along with our C$0.60/shr price target, which is based on the average of a DCF (11% WACC, 3% terminal growth) and a rolled-forward 15x 2024E EV/EBITDA multiple. We believe a higher-end multiple is warranted due to NLH’s lower-risk payor mix,
faster expected growth, and the pure-play nature of its operations. Our target multiple is also consistent with M&A activity in the space, notably the ~15x 2023E EV/EBITDA announced acquisition of Amedisys (AMED-NASDAQ, NR) by UnitedHealth Group Inc. (UNH-NYSE, NR) last year.”
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