Echelon starts CareRx at buy; PT $7.25 (Canadian)


Echelon Capital Markets initiated coverage of CareRx (TSX:CRRX) with a “buy” rating and price target of $7.25 (Canadian). The stock closed at $5.39 on March 29.

CareRx is Canada’s leading pharmacy services provider for elderly care facilities and communities, currently serving about 50,000 residents across approximately 900 sites.

“The company’s scale, service offerings, and technology leadership make it the natural consolidator in a fragmented market and a likely beneficiary from an upcoming contract renewal cycle for more than 40,000 beds in the 2021-22 timeframe,” writes analyst Stefan Quenneville.

While the COVID-19 outbreak has created a near-term headwind for the industry, the demographic trends of an ageing population provide a long-term tailwind, he added.

As concerns over COVID-19 abate with successful vaccination programs, and CareRx executes on its goal to double its beds serviced by 2023 via organic growth and M&A, “we expect shareholders to benefit from meaningful operating leverage and multiple expansion,” Mr. Quenneville said.

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