In a July 7 research note, analyst Rob Goff reported that Echelon Capital Markets initiated coverage on CloudMD Software & Services Inc. (DOC:TSX.V; DOCRF:OTCQB; 6PH:FSE) with a Speculative Buy rating and a CA$1.40 per share target price. The healthcare tech firm is currently trading at roughly CA$0.64 per share.
Goff described the Vancouver-based company as having an "integrated model positioned to monetize on telehealth emergence and organic, acquisition-driven growth."
This model consists of a business-to-consumer and business-to-business healthcare platform with numerous components, including telehealth, billing, electronic medical records and more. CloudMD achieves growth in part through acquisitions and partnerships.
Goff explained why CloudMD's platform and the continuing buildout of it make the company an attractive investment opportunity. For one, the COVID-19 pandemic has sped up development of the telehealth industry by about three years, he wrote. Echelon expects an "integrated, in-clinic, online digital model" to slowly replace the traditional model and ultimately become the standard for healthcare delivery.
Telehealth, the core, is expected to surpass $1 billion in patient billings in five years, through support by patients, physicians and regulators.
"We see Amazon's moves toward the healthcare market as endorsement for the sector's demographic growth prospects, a threat to legacy models and a catalyst to consolidate the ecosystem towards larger, vertically integrated providers," commented Goff.
The analyst addressed CloudMD's current undervaluation. He noted that "the company's current enterprise value of $86.1 million "significantly undervalues the economic potential within CloudMD's portfolio and strategy" and does not "reflect the telehealth trajectory."
Also, Goff highlighted that Echelon expects CloudMD's shares to positively rerate as the firm becomes financially sound, which will be driven by a series of potential near-term catalysts.
Those include CloudMD achieving Q4/20 revenue of $7.1 million and an EBITDA of -$0.1 million, booking more than 0.2 million telehealth appointments this year, completing the testing phase of its pharmacy kiosks and moving toward a large deployment of them, and acquiring additional assets.
[NLINSERT]Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Echelon Wealth Partners, CloudMD Stofware & Services Inc., July 7, 2020
Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.
I, Rob Goff, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
Important Disclosures:
Is this an issuer related or industry related publication? Issuer.
Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer? No
The name of any partner, director, officer, employee or agent of the Dealer Member who is an officer, director or employee of the issuer, or who serves in any advisory capacity to the issuer. No
Does Echelon Wealth Partners Inc. or the Analyst have any actual material conflicts of interest with the issuer? No
Does Echelon Wealth Partners Inc. and/or one or more entities affiliated with Echelon Wealth Partners Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer? No
During the last 12 months, has Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer? Yes
During the last 12 months, has Echelon Wealth Partners Inc. received compensation for having provided investment banking or related services to this Issuer? Yes
Has the Analyst had an onsite visit with the Issuer within the last 12 months? No
Has the Analyst or any Partner, Director or Officer been compensated for travel expenses incurred as a result of an onsite visit with the Issuer within the last 12 months? No
Has the Analyst received any compensation from the subject company in the past 12 months? No
Is Echelon Wealth Partners Inc. a market maker in the issuer’s securities at the date of this report? No
