From today's G&M Investor Section CloudMD Software & Services Inc. (DOC-X) is poised to benefit from the rise of telehealth brought on by the COVID-19 pandemic, according to Industrial Alliance Securities analyst Rob Goff.
He initiated coverage of the Vancouver-based company with a “speculative buy” rating.
“We believe the COVID-19 crisis has irreversibly fast-forwarded the development of a vibrant telehealth industry by 3+ years clearing the previously daunting hurdles of regulatory reform and adoption by physicians and patients alike,” said Mr. Goff. “We forecast that telehealth billings will surpass the billion-dollar threshold (still less than 2.5% of the market) within the next five years. We look for the traditional healthcare services model to transition to an integrated in-clinic, online digital model facilitating improved patient care with significantly improved physician availabilities. We look for integrated physical and online capabilities to become the standard for care. Ultimately, the healthy scenario we foresee rests on the ability of telehealth to better serve the needs of patients, physicians, and public policy.”
Mr. Goff sees Amazon.com Inc.‘s (AMZN-Q) moves toward the healthcare market “as endorsement for the sector’s demographic growth prospects, a threat to legacy models, and a catalyst to consolidate the ecosystem towards larger, vertically integrated providers.”
“These considerations support our bullish thesis towards CloudMD’s integrated healthcare platform development. Marquee partnerships with IBM (IBM-N) along with the Jim Pattison Group attest to management’s strength while contributing towards the development of differentiated technology and distribution capabilities,” he added.
In justifying his rating, Mr. Goff said CloudMD has built an integrated healthcare platform on a modest capital outlay that brings “patient showcase capabilities and a significant competitive advantage in its low-cost B2B and B2C distribution capabilities.”
He set a target of $1.40 per share. The average is $1.43.
“We believe the current enterprise value at $86.1-million significantly undervalues the economic potential within CloudMD’s portfolio and strategy,” he said.