Opinions
Peter Hodson
Medical Facilities Corp.
DR-T
DON'T BUY
Jan 23, 2020
They have surgical facilities in the US. It was trading for the dividend and then things fell off the rails and they cut the dividend. He was concerned that something was wrong. They made an asset sale recently to try to clean things up. Let the shareholder base switch over and let things settle.
$4.610
Stock price when the opinion was issued
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COMMENT
He owned it because of the big dividend yield. Management was always optimistic about the hospital being built in South Dakota and thought because they had a lot of other facilities it might mitigate the situation. They told us the last two quarters that everything was fine but now we find it is not.
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HOLD
They own ambulatory facilities in the US. There was concern about how soon they could get their surgeries up and running again after COVID. There are issues around Medicare and Medicaid paying for procedures. These are always a risk. He still owns it. It seems like things are continuing to improve. You could at least get the recovery, although the long term growth is not what it was previously.
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TOP PICK
They provide elective surgical services in the U.S., though it's a Canadian company. Because of Covid, those services have collapsed, but will recover as the economy reopens. Such surgical demand will be out of sight, because of huge pent-up demand. Also, the valuation is much lower than the historic norm. They will enjoy 2-3 boom years. (Analysts’ price target is $9.84)
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