2023-05-03 17:00:30
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What to do with the titles of Dialogue, Aritzia and Cargojet? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.
Dialogue Technologies de la Santé (CARE, $3.53): the first quarter should reach the upper limit of expectations
The nation’s leading integrated virtual health and wellness platform will release first-quarter results on May 9 following markets close.
Nick Agostino of Laurentian Bank Securities forecasts are slightly above consensus for both revenue and operating loss.
The forecast revenue of $24.5 million corresponds to the high end of the guidance provided by the Montreal company best known for its Optima employee assistance service.
This is an increase of 25.3% compared to the same quarter a year earlier. This increase decreases to 10.3%, however, if we exclude the British well-being platform Tictrac acquired in April 2022.
The number of monthly members is expected to increase by 38% to 2.8 million compared to last year. They totaled 2.4 million in the fourth quarter, excluding Tictrac.
The attach rate, or the average number of programs used by each member, is expected to be 1.6, slightly better than the rate of 1.55 from the previous quarter.
Member-service units (UMS), i.e. the total number of unique members multiplied by the attachment rate, should show an increase of 46% to 4.5 million, the analyst also predicts.
Contractual recurring and repeat revenue is expected to increase by $13 million with the addition of 170 new customers in the fourth quarter of 2022 and 125,000 new members in the first quarter. The health, mental health and wellness services segment will contribute the most to this improvement as employee assistance service Optima lost a major client last year that will cut revenue by 20%.
Gross margin is expected to be 55.9%, midway through the target range of 55-56.5%, driven by the effect of economies of scale, adoption of more cost-effective -being and rising prices.
The analyst therefore forecasts an operating loss of $1.8 million, ie at the bottom of the range of $1.8 to $2.1 million expected thanks to more diligent cost control. The company remains on track to deliver a first operating profit in the fourth quarter, as promised.
Dialogue has cash of $52.5 million and unused borrowings of $10 million, which is enough to pay off its deficit and consider other acquisitions. “The company wants to add to its service offering, but nothing is imminent. Given that recurring and repeat revenues have crossed the $100 million mark, larger acquisitions will be needed to make a difference,” says the analyst.
Nick Agostino renews his buy recommendation and his target price of $6.25, ie 77% more than the current price. The analyst argues notes that the stock is less expensively valued than medical technology companies despite its growth and higher margins.
Aritzia (ATZ, $33.31): 2024 kicks off, stock plunges
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