VMD stock wins price target raise at Beacon

Following the company’s fourth quarter results, Beacon Securities analyst Doug Cooper has raised his price target on Viemed Healthcare (Viemed Healthcare Stock Quote, Chart, News, Analysts, Financials NASDAQ:VMD)

On March 6, VMD reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $12.8-million on net revenue of $50.7-million.

“We’re thrilled to announce another exceptional year of financial performance at Viemed, marked by robust double-digit annual growth and sustained profitability,” CEO Casey Hoyt said. “We are particularly pleased with the Company’s capacity to generate free cash flow, enabling us to fuel continued strong growth. This underscores the effectiveness of our strategic initiatives and the dedication of our entire team. These accomplishments reaffirm our commitment to delivering enduring value to our stakeholder.

“Viemed reported another record quarterly sales and EBITDA result,” Copper said. “Headline Q4 results were revenue/EBITDA of $50.7m/$12.8m (25.2% margin). We note that the key performance indicators again hit an all-time high.

The analyst looked closely at organic growth vs. growth by acquisition for VMD.

“While management indicated that organic growth is its highest priority and it believes it can continue to grow 15%+ per year, it also noted its M&A pipeline is robust,” he wrote. “Ideally, it would like to buy a company similar to HMP ($30 million in revenue, strategically located in a state where VMD does not have a major presence, ability to transition patients to re-supply and vents and ability to buy for ~4.5x EBITDA). While we have not factored in any acquisitions in our projection period, we believe they are likely.”

In a research update to clients March 7, Cooper maintained his “Buy” rating but raised his price target on the stock from $14.50 to $15.75, implying a return of 60 per cent at the time publication.

The analyst thinks VMD will post EBITDA of $54.9-million on revenue of $216.9-million in fiscal 2024. He expects those numbers will improve to EBITDA of $62.4-million on topline of $244.2-million in fiscal 2025.

“We maintain our buy recommendation but move our valuation forward to FY25. We now target a 10x EV/EBITDA multiple on our FY25 EBITDA forecast of $62.4 million to arrive at our $15.75 target price,” Cooper concluded.