Canaccord Initiates Coverage KITS Eyecare Ltd. “offers investors attractive exposure to the highly fragmented, high-margin eyecare market,” according to Canaccord Genuity analyst Derek Dley.
He initiated coverage of the Vancouver-based company, which began trading on the TSX on Jan. 19, with a “buy” recommendation, seeing it “well positioned on the precipice of what will be an acceleration of the penetration of e-commerce within the retail eyecare market.”
“The company’s unique, 100-per-cent online-only business model should allow KITS to exceed the average industry growth rate, as e-commerce eyecare penetration is set to accelerate, in our view,” said Mr. Dley. “The company is run by a seasoned management team, which together owns 74 per cent of the shares outstanding and has demonstrated prior success in the online eyecare market. We believe the current valuation of 1.3 times our 2022 estimated revenue estimate, versus peers which trade at 2.9 times, represents an attractive entry point.”
Currently the lone analyst covering the stock, he set a target of $17 per share
“We believe KITS deserves to trade at a premium to the broader eyecare retail peer set, due to the company’s higher growth rate, strong management team, and healthy balance sheet,” he said. “Furthermore, the company’s focus on e-commerce only sales should command a higher multiple than brick-and-mortar peers, in our view, particularly in the challenging brick-and-mortar COVID-19 environment.”