Royal Bank down price target RBC analyst Irene Nattel cut her price target on Neighbourly Pharmacy Inc (NBLY-T) to C$28 from C$34 but reiterated an “outperformer” rating after adjusting her assumptions on how quickly the company can grow in the higher interest rate environment.
“With NBLY credit facilities fully exposed to variable rates, we are moderating our network growth outlook to sustain leverage close to current levels. Nonetheless, revised forecast +33 stores each year could prove conservative relative to stated range 35-40 if the backdrop improves. Combination of lower financial forecasts (F24/F25 EBITDA down -6% and -10% from prior) and target multiple 14x (-1x) to reflect higher interest rates and slower pace of M&A” results in the lower price target,” she said.
Neighbourly Pharmacy operates a network of community pharmacies and the company’s growth comes mostly from making additional acquisitions.