Can Canoe Health bounce back from the recent selloff?

Dec. 1st full week ends, Stocks Cano Health (NYSE: CANO) It fell 35.6% on the week – closing below $1.50. That’s very close to the stock’s 52-week low of $1.30, and that puts the stock down more than 84% this year. The stock opened the week at $2.01.

The bad news comes after the company lamented an already disappointing Q3 report. In the earnings report, Cano reported a loss of $112 million, which contributed to the early decline. It resulted Cash flow is only $24 million (cash and equivalents), and this has led to widespread concerns about the company’s ability to bounce back. After all, confidence had already slipped in failed buyout possibilities from both CVS Health and Humana.

But the stock really dragged on that week Sale of Third Point’s remaining 3.5% stake in CANO. The investment advisory firm, run by Dan Loeb, expressed lingering concerns about the company’s cash flow, particularly following the failed acquisition. The lack of cash puts them in a precarious position, as the company was only able to go public last June through a special purpose acquisition company (SPAC).

Solutions include Quick Cash and Pumping Up Membership

Obviously, CANO’s primary focus is to make some quick cash. Typically, that strategy involves a few investors exiting the market with the money they need. Unfortunately, potential matches are few and far between now; And rightly so.

The company has already tried to address this by increasing membership. All told, Canoe Health operates 141 geriatric primary care centers across the country. By increasing their membership, they were able to increase Q3 revenue by 33% (from 2021) to $665 million.

Also, Canoe Health can capitalize on the needs of its primary customer base and create mechanisms to increase its profitability by reducing its Medicare spending ratio and reducing the number of Medicaid members.

Initial downgrades may cloud CANO’s long-term potential

Downgrades have been consistent over the past couple of months, and the stock’s downward trend certainly reflects that. But even with the downgraded outlook, it appears that investors still aren’t fully invested in Canoe’s long-term potential. In fact, their current price-to-book ratio is still an impressive 0.83, despite several external factors weighing on their potential long-term outlook.

On top of that, the company is trading above 50% of its daily average. While this certainly includes those who may hold back, there is also the possibility that some will jump ship. After all, stock is next Price target is $6.00, significantly higher than $1.43 (as of noon, December 9, 2022); It should be done by late February/early March 2023.

The recent earnings beat(s) may indicate the beginning of a reversal

In fact, a quick look at earnings history shows that progress has not been a fluke. when revenue Having missed the target(s) for most of the last year, this metric is improving. Q2 2022, for example, beat stock EPS estimates by (-$0.04); In this case, even a penny is something to celebrate. The margin increased as Kano Health reported EPS of -$0.01 for the third quarter of 2022, beating estimates by three cents.

With that in mind, it might be a bit premature to count them out now. All in all, the next earnings target is impressive, despite the low optimism 319.6% upside potential. While earnings are currently negative, analysts expect earnings losses to be smaller, with potential growth narrowing earnings losses from -$0.25 to -$0.16. This is an improvement of over 35%.

While we are on the topic of “progress”, it is worth mentioning that every year Kano Health has seen a steady improvement in both its financial position and operational health. For one thing, as mentioned above, earnings continue to grow, as does EPS. Additionally, Adjusted EBITDA for Q3 2022 came in $42.5 million. This is a 211% increase over the $13.6 million they reported in the same quarter last year.

All this suggests that although Canoe Health has experienced some difficulties, it is also a young stock. So while it might not be the right investment for everyone, it might be one to watch in the future. This justifies the average analyst rating of HOLD, even as liquidity issues develop, and the company’s track record of revenue growth and new focus on membership gains should reassure the patient.

Analysts set new price targets

Several research firms have recently commented on CANO. Citigroup decreased their price target on shares of Canoe Health from $7.00 to $5.00 and set a “buy” rating on the stock in a research note on Wednesday, November 16th. Credit Suisse Group reduced their price target on Canoe Health to $4.00 in a research note on Monday, November 28th.

Cowen downgraded shares of Kano Health from an “outperform” rating to a “market perform” rating in a research report on Thursday, November 10th. Bank of America dropped coverage on shares of Canoe Health in a research report on Friday, September 23rd. Finally, Truist Financial started coverage on shares of Canoe Health in a research report on Wednesday, September 7th.

They set a “hold” rating and a $7.00 target price for the company. One research analyst has rated the stock with a sell rating, six have issued a hold rating and one has given a buy rating to the company’s stock. The company has a consensus rating of “Hold” and an average price target of $6.00, according to MarketBeat.

Kano Health Price Effectiveness

The company has debt to equity ratio of 1.17, quick ratio of 1.64 and current ratio of 1.64. The stock’s 50-day simple moving average is $3.96 and its 200-day simple moving average is $5.22.

About Canoe Health

Kano Health, Inc. provides primary care medical services to its members in the United States and Puerto Rico. It owns and operates medical centers powered by Canopanorama, a proprietary population health management technology-powered platform that provides healthcare providers in its medical centers with a 360-degree view of their members with actionable insights to improve care outcomes and member engagement.

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