RE:Raises Target
I followed up on this and went and read SF's reports at CIBC. I compared it to LSPDs report issued by other authors from CIBC the same day. You would think that there would be some common comparisons as the media spin is that intenet companies prices are now based on who will make earnings now and in the future. Both companies are supposed to be creating internet applications to improve efficiencies the real world.
I should probably have titled this WHY I HATE ANALYSTS. I say this because the comparison in how these 2 companies are presented is not even remotely close. They are quite similar companies on paper. I am not a certified accountant but I can get the gist of things from reading Earnings reports. That's when companies can't lie about their numbers without risking punishment up to and including jail time.
They are similar in many ways. WELL has 204 million shares out. Lightspeed has 147 million shares out.
They work in the same space. LSPD is focused on helping smaller businesses. WELL is focused on the health industry.
Both have become relevent in the last 2 years.
Both have had their price rise quickly.
Here is where things start separating between the 2.
WELL's earnings is -$.15 per shareYTD. LSPDs earning are -$1.91 per shar YTD.
WELL's revenue was $99 million this quarter. LSPD revenue was 133 million.
WELL's''s Ebita was positive 22 million LSPD Ebita was -8.7 million.
Here's the rub.
LSPDs target price was derived with a 20X multiple of 2023 revenue. That was down from 30X.
WELL's's target price was derived with a 12X multiple of CRH adjusted Ebita coupled with a 5.5X multiple of primary care and virtual services adjusted Ebita.
The trip for someone who was an owner of LSPD is that the peak price went up to $160 per share. However, it became apparent that something was terrible wrong with their share price. It dropped by 50% after earnings. On this BB the news is filled with attorney ads looking to represent folks in class action lawsuits. The Analysts are scrambling to justify the share price and valuations that they posted. And they are scrambling trying to get people to buy the shares at this price. People do not like to buy scandalized companies. It is clear that they have left a long and clear paper trail and the analyst do not look good for supporting and treating this company as a Bay Street Darling.
WELL on the other hand is standing its ground. Just because a company has good earnings does not mean the stock price jumps right away. However, doing good business does make money and the company grows shareholder value. Sometimes it is not good business to get caught up in a momentum play of a BSD. Stick with someone who knows how to build a valuable company and be patient.
At the end of his valuation segment in his article, SF noted his projection in a 3 part statement.
Downside Scenario 3.50 Base case 11.50 Upside case 16.50
That's a valuation that really goes out on a limb.