WELL Health Technologies (WELL.TO)

Lots of momentum in the US. 12-month price target of $6.47.

Company ability to grow very good. Lately stock has been volatile. M&A a little questionable. Has not been following business closely. Good option in the healthcare space, but would recommend watching. 

Small cap. It would move with a major catalyst like institutional interest, a major contract, or a merger. Otherwise, it's just not on the radar. People own these hoping for a home run, but have to look at your opportunity cost.

Increased 2024 guidance. 98% recurring revenue which is very attractive. Not a cheap valuation, would recommend holding, or buying on weakness. A good "small position" in portfolio. 

It is a digital health company. The CEO ran a previous company which did very well. Well Health did well during Covid and made a lot of acquisitions, but hasn't done well since Covid. He is not interested because of lack of profitability and ROC is not as high as he is looking for. He respects the company which has done a good job on the topline but needs a better bottom line. Analysts seem to like it since they make lots of money from it. 

Healthcare is a good theme and the sector needs to be more efficient so opportunities lie ahead. Strongly likes this.

In regards to WELL's business update we think it provided a positive development. Two Canadian clinics were added in Q4 generating approximately $28 million in annualized revenues for total consideration of less than $400,000 and are expected to positively contribute to EBITDA in 2024. We like this news and should help WELL's Q4 earnings. Additionally, the company is focussed on improving cost efficiencies and is making progress in pursuing oppurtunities in its pipeline. We like WELL as a small cap name that is displaying growth and operates in a fast growing niche. 
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He doesn't follow this. They aren't earning money now, not positive yet. Has no reason to buy it, but he doesn't know this industry well.

He is not too familiar with the company but technically there has been quite a drop from its top two or three years ago, and it doesn't look that great right now. It is below its various moving averages and there is quite a lot of active trading. The recent big reversal after the rally is a bad sign. Don't buy right now - wait until $3.50. Look at the bottom line and top line sales.

Another strong quarter with meaningful new wins. He models 43% revenue growth, 63% EPS growth. 13x 2024 earnings. Less appetite for stocks when bond yields are high, people are afraid. Makes sense at these levels.

Growing both organically and by acquisition, now just shy of $1B in revenue. Stock's pulled back, still a fairly attractive valuation. Expects a takeover down the road.

We would look at growth rate and forward price/earnings ratios here. Right now WELL is 21X. if we shift earnings to F2024 rather than F2023 it drops to 15X. Considering its history and management and potential, we could see this rising to 20X again, giving 30%+ upside potential if earnings come in as expected. Thus, we would be comfortable buying at the $4 to $4.20. 
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The stock has performed well this year - it was as high as +~110% year-to-date, and we see some consolidation here as being healthy. We do not see any specific news that would cause the share price to drop. At a 14.2X forward P/E and expectations for strong growth going forward, we would consider it buyable, however, we would like to see the price find support before entering here. 
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Shares recently dropped over disappointing margins and profits, but they are the best in telehealth. Also, they made puzzling acquisitions. But the CEO has a great track record and blue-chop investors are involved. The stock isn't going anywhere, but the market wants to see better profits.

WELL is up 84% YTD and not that far from its 52-week high. It ran up hard this year and the drop does look like profit-taking to us since there really was no negative news. We would consider it buyable today. For the Canadian sector we see it as quite attractive.
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