On Friday, CIBC raised its target price on shares of Well Health Technologies Corp. (WELL:CN) (OTC:WLYYF) to C$5.00, up from C$4.75, while maintaining a neutral rating on the stock. The revision comes after Well Health reported second-quarter revenue and EBITDA that beat expectations, driven by strong growth and better-than-expected profitability at its subsidiary Circle Medical.
The CIBC analyst noted that Circle Medical’s performance is particularly important given that the unit is currently on the market and likely to be sold. Strong results could weigh on the potential sale valuation. However, the analyst also noted that the company’s core business, which is not for sale, is healthy with around 8% organic growth.
Well Health also announced its intention to spin off its Software as a Service (SaaS) and Technology divisions. The company’s management believes that the digital business is undervalued within Well Health’s current structure. This strategic move is aimed at unlocking value for shareholders.
The adjusted price target of C$5.00 per share, up from C$4.75, is based on the sum-of-the-parts (SoTP) valuation method. Despite the positive outlook on the company’s performance and strategic plans, the CIBC analyst maintains that the shares are relatively fair value at their current levels, hence the decision to maintain a Neutral rating.
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