Scotia UpgradeScotiabank Equity Research
Monday, July 24, 2017, Pre-market
CRH Medical Corporation
Market Reaction to Recent CMS Changes Appears Overdone
OUR TAKE: We are upgrading the shares of CRH to Sector Outperform as we believe the recent sell off in the shares more than accounts for the impact the changes proposed by CMS on July 13, 2017 will have on the company's operations and its potential to execute its acquisition strategy. While we view acquisitions as the main catalysts for the shares and believe deals may be delayed somewhat while they are reevaluated and revalued under the new CMS PFS, the current share price offers an attractive risk reward entry point that outweighs potential near-term headwinds, in our opinion.
CRH is scheduled to announce Q2 results on August 2, 2017 after market close. We expect a relatively straight forward quarter from an operational perspective as the company did not make any acquisitions in the quarter.
Price Target to $7 from $8 due to the adoption of a more conservative valuation methodology that includes a multiple valuation to a comparable group of companies with less growth potential