Quipt Home Medical a “Top Pick” at Ventum

With its stock on an extended slide, Ventum Capital Markets analyst Stefan Quenneville thinks there is money to be made on Quipt Home Medical (Quipt Home Medical Stock Quote, Chart, News, Analysts, Financials TSX:QIPT).

In a research update to clients July 15, the analyst reiterated his “Top Pick” status on QIPT, while simultaneously maintaining his “Buy” rating and price target of $11.75 on the stock.

“We reaffirm QIPT as a Top Pick as we remain bullish on the home care focused durable medical equipment (DME) industry,” he wrote. “Meanwhile, we view the Company as being in an M&A sweet spot as an attractive target for one of the few larger national players, while the fragmented DME market provides ample opportunity for accretive acquisitions.”

The analyst says catalysts for QIPT include solid organic tailwinds, a proven M&A track record, strong organic growth with cross-selling opportunities, and an order overhang.

Quenneville thinks QIPT will post Adjusted EBITDA of $61.4-million on revenue of $260.9-million in fiscal 2024.

“We expect solid financial results and potential further accretive M&A activity from the Company as key catalysts. Additionally, clarity on and/or resolution of the ongoing DOJ/SEC investigations should also trigger a material recovery in the stock,” the analyst concluded. “We arrive at our C$11.75 target using a 7.5x EV/EBITDA multiple on our 2024 EBITDA estimate. We view QIPT as a compelling opportunity for investors as it currently trades at 3.5x versus its broader North American peer group at a median valuation of 9.4x and its closest peers, Viemed (VMD-NASDAQ, NR) and AdaptHealth (AHCO-NASDAQ, NR) trading at 5.3x.”