Freedom Broker raises Viemed target price amid growing sleep therapy market
Freedom Broker has raised its target price for Viemed Healthcare, a smaller company that provides in-home respiratory support, by more than 18% to $11 per share. The upgrade is attributable to the company’s third-quarter financial results, which beat expectations amid robust demand in the sleep therapy segment. Viemed links this growth to the rising popularity of weight-loss drugs.
Details
Freedom Broker set a target price of $11 per share for Viemed Healthcare stock, as reported in an analyst note this week. The new target price is more than 18% above the previous one and 20% above the most recent closing price of $9.15 per share (on Wednesday, November 13). The stock is up almost 17% since the beginning of the year and more than 28% over the last 12 months. According to MarketWatch, Viemed is covered by three analysts, who have an average target price of $12.83 per share.
Viemed’s revenue for the third quarter beat analyst expectations, Freedom Broker noted. It came in at $58.0 million, nearly 1.5% above the consensus forecast of $57.2 million, while adjusted EBITDA of $14 million was more than 9% higher than the consensus. The top line was better than the company’s August-issued guidance of $56.5-57.7 million. For the fourth quarter, Viemed expects revenue of $59.7-60.9 million, above Freedom Broker’s expectations, as mentioned in the note.
What’s driving Viemed’s growth
Freedom Broker attributes Viemed’s growth to a revised sales approach and strong demand in the sleep therapy segment. This business line generated 17% of the company’s third-quarter revenue, up from 15% in the previous quarter, Freedom Broker said, citing Viemed’s management. The company thinks this has to do with the rising popularity of GLP-1 weight-loss drugs. Excess weight often leads to sleep apnea — temporary breathing pauses during sleep — which can be treated. The more people consult physicians about weight loss, the more sleep issues are detected.
Context
Weight-loss drugs are a booming market. Boris Tolkachev, an analyst at Freedom Finance Global, called this a “silent revolution,” comparing the breakthrough, from a medical standpoint, with that of statins, cholesterol-lowering drugs, in the 1980s and, from a popular culture standpoint, with that of Viagra. Today, more than 90% of the weight-loss drug market is dominated by two drugs: Wegovy by Novo Nordisk of Denmark and Zepbound by Eli Lilly of the U.S. However, dozens of companies, from pharmaceutical giants to smaller firms, are developing their own weight-loss drugs.
But the investment opportunities around obesity do not end there, and Viemed is a case in point. Tolkachev highlights companies that are developing drugs to minimize the side effects of GLP-1 agonist therapies. For instance: ScholarRock, which is testing apitegromab for spinal muscular atrophy and assessing its potential for preventing muscle loss — one of the side effects of GLP-1 drugs.
