RE:QIPT vs NVDA
Globe says Quipt Home Medical lowered to "underperform"
2024-05-17 07:37 ET - In the News
The Globe and Mail reports in its Friday edition that Raymond James's Rahul Sarugaser has cut Quipt Home Medical to "underperform" from "market perform." The Globe's David Leeder writes that Mr. Sarugaser slashed his share target by $7.50 to $2.50 (all figures U.S.). Analysts on average target the shares at $9.75. Mr. Sarugaser says in a note: "In reviewing Quipt Home Medical's PPE schedule we note the regular transfer of inventory on its balance sheet to rental equipment (part of PPE). We also note that this equipment has an exceptionally short average useful life of just over 12 months, and we view these rental equipment transfers effectively as Capex. Quipt finances the bulk of these purchases with equipment loans from financing partners, which are typically paid off over the life of the asset. As such, payments on these loans are recorded as repayments of debt in the financing section of the cash flow statement, rather than as PPE purchases in the investing section. This could lead to an underestimate of the underlying Capex in the business. We do credit Quipt for now explicitly outlining its free cash flow. [It has removed] what is effectively a recurring cash charge given the short useful life of these assets."