Neighbourly Pharmacy (TSE: NBLY) operates a network of community pharmacies.
The company recently reported earnings for its fourth quarter of Fiscal 2022. Earnings per share came in at C$0.05, which was above analysts’ consensus estimate of C$0.01 and above the adjusted EPS of -C$0.08 for the same period last year. In the past five quarters, Neighbourly has beat earnings estimates only two times:
Nevertheless, Neighbourly saw strong revenue growth of 34.9% year-over-year, with revenue hitting C$112.3 million compared to C$83.3 million. The increase in revenue can be attributed to the acquisition of 41 pharmacies during the prior 12 months.
Furthermore, same-store sales and same-store prescriptions increased by 2.3% and 1.8% year-over-year, respectively.
However, gross profit increased by 34.3%, which was slightly less than revenue growth. This means the company hasn’t demonstrated that it has operating leverage. Indeed, its gross margin has contracted from 37.5% to 37.3%. Still, gross profit growth has kept up close enough to revenue growth to result in an immaterial impact on profitability.
In addition, Neighbourly reported very strong yearly Pro-Forma results, which adjusts for acquisitions made or yet to close after March 27, 2021, as if owned on March 27, 2021. In fact, Pro-Forma adjusted EBITDA came in at C$98.5 million, while Pro-Forma revenue was C$798 million. For reference, Neighbourly’s market cap is C$840 million.
Analyst Recommendations
Neighbourly Pharmacy has a Moderate Buy consensus rating based on two Buys and two Holds assigned in the past three months. The average Neighbourly Pharmacy price target of C$36 implies 47.4% upside potential.
Final Thoughts
Neighbourly saw a strong quarter, as revenue grew 34.9% year-over-year. In addition, earnings per share came in above estimates while same-store sales increased. As a result, analysts remain positive about the stock as it continues to grow by acquiring smaller players.
