RBC raises price target on WELL Health Technologies

It has been a strong performer of late and it remains a “preferred stock pick” for 2025 at RBC.

The company is WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WELL) and analyst Douglas Miehm January 7 reiterated his “Outperform” rating and raised his price target on the stock from $7.00 to $8.50.

Miehm says despite the large gains had by investors in 2024, 2025 is a year in which they can look forward to more.

“WELL remains one of our preferred stock picks into 2025,” he wrote. “After strong performance of WELL shares in 2024 (+78% vs. +22%/+19% total returns of TSX60/TSX Small Cap), we see room for further upside in the shares. We believe the company has built a compelling moat in consolidating and transforming primary care and diagnostic clinics in Canada, where other groups have faced significant challenges. We transition our valuation to DCF valuation vs. an equal weighting of SOTP and DCF previously”.

The analyst noted that he has changed the way he looks at WELL.

“We transition to a DCF valuation for our price target calculation on WELL shares from an equal weighting of SOTP and DCF valuation, as the company streamlines its business model to transform and consolidate primary care and Dx clinics in Canada,” Miehm added. “WELL has announced several steps in this direction, including: 1) a strategic review of Wisp and Circle Medical, with a potential sale on the horizon; and 2) a potential spinout of WELLSTAR (WELL’s SaaS & Tech business). Our DCF valuation for WELL results in an $8.50/sh PT. In our view, WELL could potentially acquire some distressed ELNA clinics at minimal cost, and if it can replicate its successful track record of transforming loss-making clinics, it could generate exceptionally high ROICs, thereby creating significant shareholder value. We note that our forecasts do not account for any unannounced acquisitions, which could provide potential upside to our estimates and valuation for WELL shares.

Disclosure: WELL is an annual sponsor of Cantech Letter and Nick Waddell owns shares of the company.