Analysts Raise QIPT Price Target Amid Low Debt Burden, Strong Growth

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Analysts raised their price target for QIPT from around $2 to $3 at the start of 2021 to between $9 and $13 per share after Quipt Home Medical QIPT exceeded quarterly earnings expectations yet again. The company behind the innovative in-home monitoring and disease management platform has reported consistent and strong growth over the past year. 

A diligent strategy of optimizing operations to keep costs down and leveraging a growing nationwide network of customers and products has enabled Quipt to achieve impressive results without relying on debt to finance its growth. Here’s what has analysts so bullish about the newcomer to Nasdaq.

Quipt Reports $20 Million in Undrawn Credit and Low Total Debt

With $37 million in cash on hand, Quipt has a healthy amount of liquidity that allows it to avoid financing its growth with new debt. The company’s debt is essentially a convertible debenture with forced conversion feature that sits at $11.5 million CAD, and it has not had to draw on its $20 million revolving credit facility.

Quipt’s low debt burden and rapid revenue growth has increased its enterprise value — a measure of the company’s total value, including debt — from about $150 million at the end of 2020 to about $270 million in analyst’s latest valuation this summer.

Strategic Optimization and Aggressive Expansion and Acquisition Plan Drive Growing Margin

Quipt has maintained this low debt burden, even while executing a relatively aggressive acquisition strategy by focusing on acquisitions that can easily integrate into Quipt’s business model and quickly generate revenue for the company. 

This approach has helped Quipt build up a presence in 15 states, scale its production and distribution, and consolidate across regions in a way that helps further lower the cost of goods sold (COGS) while also generating additional revenue.

This cost-efficient strategy has also led to consistent quarter-over-quarter revenue growth and increasing cash flow over the past year. More impressive is the fact that 75% of its revenue is recurring revenue, generated largely by its subscription-based supply services. 

As a result, Quipt’s margin is widening on both sides — with costs decreasing at the same time revenue increases — and investors have good reason to believe this growth will continue with such a large portion coming from recurring subscription services.

Investors Anticipate an Equally Strong 3rd Quarter for Quipt

In June, the company released its 2nd-quarter financials in which Quipt yet again exceeded earnings expectations. As the company continues to add new acquisitions and expand its customer base and national presence, investors are optimistic that the coming 3rd-quarter results this month will be similarly positive.

With such a strong enterprise value thanks to its low debt burden and widening margin, analysts continue to rate QIPT a strong buy as the stock’s current price is far cheaper than what analyst valuations expect it to be.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.