Yesterday and so far today the short sellers seem ineffectual in holding the stock price down. Institutional ownership continues to rise. Now 60 institutions hold 34% of float and more than 20% of outstanding. This is part of the reason plus many more eyeballs on this fast grower.
LifeMD Stock Is Undervalued by Over 300%, Says Analyst
May 18, 2021, 06:22 PM
That the stock market is a forward-thinking beast is well known, but this fact has been particularly emphasized by investors during this earnings season. While many companies have delivered excellent reports, a big chunk stumbled when providing – or even deciding to not provide – the anticipated outlook. Investors have shown that what they really what to hear is not only “that was a great quarter,” but that the business has good days ahead.
As such, LifeMD (LFMD) gave investors what they wanted to hear. The telehealth provider raised full-year revenue guidance from the $85 million to $95 million range to between $90 and $100 million. The market, in return, gave a thumbs up and sent shares higher by 35% in the subsequent session.
While the outlook is rosy, the quarter’s financials were excellent too. Revenue increased by 323% year-over-year to a record $18.2 million. GAAP EPS of -$0.47 came ahead of the estimates by $0.21. Total gross margin increased by ~1,300 bps both year-over-year and sequentially to reach 82.1%, better than Wall Street’s 77% forecast, while telemedicine orders reached over 164,000, a 373% year-over-year uptick.
One disappointing metric stood out according to BTIG analyst David Larsen.
Due to higher G&A spend and operating costs, total adjusted EBITDA of ($8.9M) fell behind the Street’s ($8.3M) estimate. However, even here, Larsen finds a silver lining.
“While the higher G&A costs are disappointing, we like how sales and marketing costs in 1Q:21 increased just slightly relative to 4Q:20,” the analyst noted.
In fact, Larsen thinks there’s a lot to like about the company right now.
“We’re impressed that the annual revenue run-rate is trending at ~$73M, the subscription rate is trending at ~92%, customer retention rates are high, and we like how management is focused on growth,” Larsen said. “We like how LFMD continues to plan launches of new brands, NavaMD was launched at the end of the quarter, and the primary care platform is expected to “go-live” this coming summer. Our view is that demand for cash-pay primary care services is high, we like how LFMD might eventually accept insurance, and it seems like LFMD appreciates how important earnings are to investors.”
To this end, Larsen rates LFMD shares a Buy along with a $40 price target. Investors could be sitting on gains of 351%, should Larsen’s forecast play out as expected over the coming months. (To watch Larsen’s track record, click here)
Only one other analyst has recently chimed in with a LifeMD review, but his assessment is almost just as effusive. The additional Buy provides the stock with a Moderate Buy consensus rating, while the $37.50 average price target suggests 12-month upside of 323%. (See LFMD stock analysis on TipRanks)