In regards to Well health; why is there such a disconnect between the share price and the analysts target prices at the moment? Other than current market weakness that is? My qtrade account shows 8 analysts with a average target price of $9/ share, all of which are current targets within the last couple months. One guy even has target of $12 that was reitterated on Aug. 10th. You would think if its institutional investors trading most of these shares that if the consensus is so great that they would not be selling, and would support the share price? Is Well currently this undervalued? If so would make it a compelling buy at the current $4 and change. Thanks,
Shane.
Dating back to the first instance of analyst coverage on WELL (~2019), the stock has almost always traded at a discount to its average price target. There were a few instances where it exceeded its average price target in July 2019 and August 2020. For all of 2022 its price target was ~200% higher than its actual price, and this premium gap has narrowed this year to ~90%. Most times, when a stock price falls significantly, analysts will be slow to update price targets, and especially if the price rebounds and begins to trend higher. The average price target of WELL has stayed flat over the past year, and we suspect if the gap between price target and its current price narrows further in the coming year, that analyst price targets might begin moving higher.
We continue to like the name and feel that it trades at a decent valuation. For its share price, much depends on the state of the market, its run-up from January to May 2023 was fueled by investors looking at unprofitable growth names once again, whereas recently its correction has been fueled by investor concerns of a pending recession. Needless to say, we continue to follow the fundamentals and feel that WELL is a fundamentally strong company.