DBS Group Research is keeping its “buy” call on Q&M Dental Group with an increased target price of $1.00 from 84 cents previously, implying a potential upside of 25%.
The DBS research team likes the stock for its Covid-19 testing business as Covid-19 testing is still relevant and will be here to stay. “With health experts globally suggesting that Covid-19 is very likely to become endemic, the world must be prepared to live with Covid-19,” says the research team.
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The research team believes that testing will be the new norm in an endemic world, because of the possibility of reinfections from new variants; asymptomatic transmission; and it allows for the removal of quarantine measures, a showstopper for travel.
“For international travel to restart, testing will be a key tool. As testing becomes the new norm, this bodes well for Q & M’s new revenue stream,” adds the research team.
Although short-term tailwinds from continued travel restrictions persist, Q&M’s medium-term to long-term prospects are supported by clinic expansion plans and artificial intelligence (AI) technology, enabling Q & M to obtain a significant portion of the dental market pie.
Compared to other market watchers, DBS admits that it is slightly more optimistic on both of Q&M’s dental business and Acumen Diagnostics business as it believes Q&M will be able to meet its expectations of 15 new clinics in Singapore in 2021 and that Covid-19 testing will become a new norm in an endemic world.
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As at 12.50pm, shares in Q&M are trading at 80 cents or 16.1 times FY2021 earnings with a dividend yield of 5.6%.
Photo: Q&M Dental Group
