Opinions
James Telfser
Akumin Inc.
AKU-T
BUY
Apr 20, 2021
A past top pick. It's the second-largest US imaging diagnostics clinic operator. They have a large presence in Texas and Florida which are reopening. AKU is rebounding from last year, when they kept margins strong. Revenue growth has rebounded well as well as volume growth. They weathered 2020 lockdowns well. Their last quarter changed accounting practices, which confused the street, but that's straightened out now. A positive outlook.
$3.920
Stock price when the opinion was issued
medical services
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TOP PICK
Investors don't recognize its value. It can grow inorganically in this environment. A solid business that operates medical MRI clinics, the number two player in the U.S. Payout rates have been very stable. Free cash flow will turn around this year. This should do well this year and boasts a lot of upside. Also, a cheap valuation. (Analysts’ price target is $5.69)
medical services
HOLD
He's long owned this. They run diagnostic imaging centres in the U.S. They charge half what hospitals do, which is attracting businesses. AKU has one big competitor in the U.S. that is twice the size of AKU. He believes the competitor will one day buy AKU. He'll wait 18 months for this take-out to happen.
medical services
BUY
The company has MRI clinics in the US. It has over 100 clinics now. He thinks it is a fantastic buy at this level. The challenge is their balance sheet, because of their unfortunate timing of an acquisition just as the pandemic hit. He thinks they will manage it just fine. Margins will be strong when things return to normal for this small cap.
medical services
TOP PICK
At an inflection point. Technology, right clinics, and right billing cycle to drive free cashflow, which is the lifeblood to being a consolidation play. US institutions are interested in it. Demographics are in their favour, a massive tailwind. No dividend. (Analysts’ price target is $5.24)
medical services
HOLD
A frustrating position. Imaging clinics in the US. Performing well and acquiring clinics. Higher margins than peers. Positive news has come out, so the rest of the year should be better, closing the gap in the valuation. Generating free cashflow and paying down debt. Alzheimer's drug will push organic demand for scans.
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