On Monday, Benchmark lowered its price target for Quipt Home Medical Corp. (NASDAQ:QIPT) shares to $9.00 from the previous $10.00 while retaining a Buy rating on the stock. The decision follows Quipt’s announcement of its financial results for the second quarter, where the company’s adjusted EBITDA fell short of expectations by 4%.
This shortfall was attributed to several challenges, including the end of Medicare’s 75/25 rate relief, a lost contract with a Medicare Advantage provider, and the repercussions of a cyberattack on Change Healthcare (NASDAQ:).
Despite these headwinds, Quipt Home Medical’s management is optimistic about achieving its organic growth target of 8%-10% for the remainder of fiscal year 2024. The company plans to reach this goal through various strategies, such as securing more payer contracts, expanding into adjacent markets, increasing its salesforce, and leveraging cross-selling opportunities.
These opportunities now include a range of diabetic products that can be marketed to the company’s existing patient base without incurring additional selling, general and administrative expenses.
The company also reported that demand for its sleep therapy products and supplies, which account for half of its revenue, remains unaffected by the introduction of GLP-1 medications.
Recent studies have shown that combining medication with Positive Airway Pressure (PAP) therapy can enhance the treatment of Obstructive Sleep Apnea (OSA), suggesting a continued market for Quipt’s offerings in this area.
Additionally, Quipt Home Medical is expected to actively purchase shares back under a new $5 million repurchase authorization. With the revised forecast for the company’s fiscal year 2024 EBITDA, the new price target of $9.00 implies an enterprise value to EBITDA ratio of 7.5x. This valuation is noted to be at a discount compared to the company’s peer group.
InvestingPro Insights
As Quipt Home Medical Corp. (NASDAQ:QIPT) navigates through its recent challenges, including the end of Medicare’s rate relief and a cyberattack’s impact, the company’s strategic efforts to stimulate growth are noteworthy. In light of Benchmark’s revised price target, insights from InvestingPro provide additional context for investors considering QIPT’s stock. The company’s market capitalization stands at $133.22 million, reflecting its position in the market. Despite the recent dip in stock price, with shares trading near a 52-week low, analysts predict that Quipt will be profitable this year, which could signal a potential upside for patient investors.
InvestingPro data shows that Quipt’s revenue growth over the last twelve months as of Q2 2024 has been robust at 46.88%, indicating a strong capacity for the company to increase its earnings. The company’s gross profit margin during this period was 72.04%, underscoring its efficiency in maintaining profitability amidst sales. Furthermore, with an adjusted P/E ratio of -32.54, the stock might appeal to those who are willing to endure short-term volatility for potential long-term gains, especially as net income is expected to grow this year.
For investors looking for more in-depth analysis, there are additional InvestingPro Tips available that could provide further guidance on whether QIPT is a suitable addition to their portfolio. With the use of the coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, which includes more valuable insights. To explore these tips and data in greater detail, visit https://www.investing.com/pro/QIPT.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
