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Bullboard - Stock Discussion Forum Neighbourly Pharmacy Inc T.NBLY

Neighbourly Pharmacy Inc. is a Canada-based company that operates a network of community pharmacies. The Company is an owner and operator of retail pharmacies located throughout Canada under banners such as IDA/Guardian, Pharmachoice, Pharmasave and Remedy’s RX. The Company, through its subsidiaries, owns and operates a network of retail pharmacies known as Rubicon Pharmacies (Rubicon or... see more

TSX:NBLY - Post Discussion

Neighbourly Pharmacy Inc > National Bank
View:
Post by retiredcf on Jul 19, 2023 8:52am

National Bank

Have recently lowered their targets for a great many companies within their coverage. GLTA

National Bank Financial analyst Zachary Evershed believes Neighbourly Pharmacy Inc.’s  reliance on relief pharmacists likely weighed heavier than originally anticipated during its first quarter of fiscal 2024 based on a reversal in the improvement of open job postings, leading him to lower his margin estimate.

“Our channel checks reveal that Neighbourly’s open positions count reversed course early in June, giving up prior improvements in vacancies,” he said in a research note. “Even though the gross number of job openings does include postings that are most likely irrelevant to margin recovery (e.g., delivery drivers, clerks), we believe it is nevertheless directionally indicative of reliance on relief pharmacists at levels higher than we anticipated. As such, we are now forecasting $19.2 million in EBITDA on 10.0-per-cent margins (was 10.3 per cent) in the quarter, reflecting an adjustment lower to account for increased expenses owing to staffing challenges, though still up 20 bps year-over-year.

“Looking farther ahead, we still anticipate some margin recovery this year as incoming graduating pharmacists enter the workforce this summer, with a more categorical improvement next year, recouping the majority of the 80 basis points labour headwind. However, we highlight the risk that pharmacists currently working for NBLY may seek larger cost of living adjustments as they take note that newer employees are being paid top dollar to ensure the company is able to attract its fair share of graduating students. We do not believe this outcome is reflected in our current estimates, and may represent further downside to our profitability forecasts.”

Ahead of the scheduled Aug. 1 release of its quarterly results, Mr. Evershed is projecting revenue of $192.3-million, up 68.1 per cent year-over-year but below the consensus forecast of $192.3-million. He estimates adjusted EBITDA will rise 70.9 per cent to $19.2-million, also under the Street’s expectation of $19.8-million. However, his adjusted earnings per share estimate of 6 cents, matching other analysts, is a drop of 34.2 per cent from the same period a year ago.

Reiterating a “sector perform” rating for the Toronto-based company’s shares, he trimmed his target to $20 from $20.50. The average on the Street is $26.72.

“As we remain wary that the tight market for new hires may yield higher labour costs in the rest of the network in the coming year, and given the balance sheet remains a limiter on the pace of M&A growth in the current interest rate environment, we maintain a cautious stance,” said Mr. Evershed.

Comment by Kanatainvestor on Jul 19, 2023 3:21pm
Thank you for the post. With so many analysts negative on the short-term outlook, it won't be hard for the company to surprise to the upside on August 1st.
Comment by zforzebra on Jul 22, 2023 10:07am
Pharmacists staffing challenges in rural pharmacies, leading to higher pay of temporary workers.  It makes sense.  Rural areas have challenges with doctors as well. This challenge will not likely change anything soon because pharmacists don't want to live in the rural unless it is too difficult to find work in the city or they are paid more than the city. The only way to resolve ...more  
Comment by Kanatainvestor on Jul 22, 2023 4:03pm
Government projections (carried out by EDC) for 2022 to 2031 showed projected job openings for pharmacists as 16,100, compared to 20,000 new job seekers who will fill these posts. Over the long term EDC projects an imbalance between the number of pharamcists seeking a job, and the number of available opening. This should incite those in the city to move to smaller towns and rural areas to find ...more