The average target price of VHI.TO is 15 and suggests 48% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 15.0. This translates into 52% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 12.5. This suggests 27% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Vitalhub Corp., together with its subsidiaries, provides technology solutions for health and human service providers in Canada, the United States, the United Kingdom, Australia, Western Asia, and internationally. Its solutions include electronic healthcare record, case management, care coordination, patient flow and operational visibility, and mobile apps. The company was incorporated in 2010 and is based in Toronto, Canada.

Canada

Vitalhub Corp.

Healthcare

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

VHI.TO reported revenue of CAD 69mn in the last 12 months, up 31% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 45% from FY23 to CAD 0.06. Market expects EPS to reach CAD 0.11 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 13ppts over past six months and grown 17ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 17.3% in the last 12 months, a decline from 19.8% in FY23. 

Historically, VHI.TO has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.4%, down from 8.7% in FY23. 

Vitalhub Corp. reported a return on equity (RoE) of 2.6% in the last 12 months, down from 5.8% in FY23. The market consensus projects an RoE of 2.6% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.8% in the last 12 months, a decrease from 4.0% in FY23. The market analysts predict that RoA will be 1.8% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 2.4%, below the peers. The consensus estimate for FY24 for RoCE is 2.8%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.5 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

VHI.TO has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, VHI.TO is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, VHI.TO is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

Vitalhub Corp.

CA$ 10.05

3

Vitalhub Corp.

CA$ 10.05

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 10.05

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