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Telehealth company CloudMD Software & Services Inc. (
) shares are on a tear amid the pandemic-driven focus on virtual health care and the company’s aggressive acquisition strategy — and analysts see more growth ahead.
Shares of the Victoria-B.C.-based company, which provides services to 376 clinics, more than 3,000 licensed practitioners and nearly 3 million “patient charts” across its servers, are up more than 380 per cent over the past year, 200 per cent over the past three months and 25 per cent over the past month.
The stock is currently trading at around $2 on the TSX Venture Exchange. The average analyst target is $2.80, according to S&P Capital IQ.
CLOUDMD SOFTWARE & SERVICES INC.
2.05+1.69 (477.46%)
YEAR TO DATE
On Thursday, CloudMD announced the launch of a new CloudMD On Demand, an online care service for companies, insurers and pharmacies.
“The service is focused on the Canadian market at this time and builds on the technology foundation established through several recent acquisitions and its growing roster of health practitioners across primary and allied health services,” Canaccord Genuity analyst Doug Taylor said in a note released after the news. “While much of the focus on CloudMD of late has been on the company’s busy M&A activity, we see today’s announcement as supporting the organic growth forecasts.”
Mr. Taylor has a “speculative buy” rating on CloudMD and $2.50 target price.
The company has been on an acquisition spree and recently closed a $20.8-million oversubscribed bought-deal financing which chief executive officer Essam Hamza called “a very important inflection point for the company” as it expands across North America. It plans to use the fund for acquisitions.
On Oct. 2, the company announced a plan to purchase 87.5 per cent of Benchmark Systems Inc., an online health care services provider in the U.S. with 200 clients, 800 physicians and 5.5 million “patient charts” across 35 states. On Sept. 24, the company said it was buying Snapclarity Inc., an online service used by employers, individuals, therapists and insurers for mental health services.
Echelon Capital Markets analyst Rob Goff has a “speculative buy” and $2.90 target on CloudMD shares and has named the company his top pick for the fourth quarter, citing in part its “robust” acquisition pipeline.
CloudMD shares have been down about 5 per cent over the past week, as of Wednesday’s close, versus a pop in related company shares such as Well Health, American Well, Teladoc Health, CB2 Insights and 1Life Healthcare which are up an average of about 23 per cent, according to Beacon Securities analyst Gabriel Leung in an Oct. 8 note.
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“We believe there could be a valuation catch up on the back of positive news flow,” wrote Mr. Leung, who has a $3 price target and “speculative buy” on the stock.
Bruce Campbell, president and portfolio manager at StoneCastle Investment Management Inc. first bought CloudMD just over a year ago and bought more in the recent issue at $1.38.
“We still like it and if we didn’t own it would buy it here,” he told the Globe and Mail in an email. “The company continues to execute on its M&A strategy and has several plans to grow.”
His firm also owns Well Health, which he says has a larger valuation and trades at a higher multiple.
“[Well Health] has a little head start on DOC but we think that DOC closes the gap from a valuation standpoint,” he adds, citing CloudMD’s stock symbol.