Q: Hi Team,
What’s driving the relentless selling of Well lately? I don’t see why investors are taking a negative view on the name recently. Is this giving us a chance to buy more at basement bottom prices here ? Price targets average over $8 today and the stocks trading down towards the $3 range. Your take on the name is appreciated. Thanks
Shane
What’s driving the relentless selling of Well lately? I don’t see why investors are taking a negative view on the name recently. Is this giving us a chance to buy more at basement bottom prices here ? Price targets average over $8 today and the stocks trading down towards the $3 range. Your take on the name is appreciated. Thanks
Shane
5i Research Answer:
WELL is up 33% year-to-date and analysts expect strong forward growth in both sales and earnings. It continues to trade at a cheap valuation (13.5X forward earnings), but is just slightly unprofitable. Although, it generates positive free cash flow and has a good balance sheet. Following its recent earnings miss, the stock has mostly been flat and we expect that any positive surge in the TSX can help bring WELL higher, but for now investors are likely seeing other opportunities in the market or waiting for the next earnings report. WELL had a big move from January to April of this year, and some of this recent price action can be profit taking. We think in a 'risk-on' year, this name can do well given its cheap valuation.