EQS-News EF Hutton Reiterates Buy Rating On HCTI, Second Time in 2022
EQS-News: Healthcare Triangle, Inc.
On September 28, 2022, Healthcare Triangle Inc (NASDAQ: HCTI) received a Buy rating with a price target of $2.00 in an analyst report by EF Hutton.
EF Hutton analyst Constantine Davides, CFA, said “We are reiterating our Buy rating on HCTI. We continue to like the risk-reward of shares here, as HCTI continues to scale its proprietary Platform offerings while expanding its Managed Services business.”
This is the second Buy rating report released by EF Hutton on HCTI in 2022. On March 14, 2022, Davides initiated coverage with a Buy rating on Healthcare Triangle and a price target of $4.00.
Here are the key points from the report:Platform Services
We view the continued adoption of HCTI's Platform offerings as a key component of potential share appreciation (multiple expansion) and an improved financial profile (predictable/recurring revenue mix and long-term margin expansion). We believe that HCTI has approximately six Platform customers, up from four at the end of 1Q, and we would expect that total to expand steadily across the next several quarters. We are projecting $4.7 million in Platform revenue in 2022 (10% of revenue), growing to $8 million by 2024 (13% of revenue).Managed Services
Along with the focus on Platform, we continue to expect HCTI to focus on the growth of this recurring revenue stream. We note that YTD Managed Services revenue growth has been negatively impacted by a change in the way HCTI reports partner pass-through revenue, which has had an optically negative impact on 2022 GAAP revenue with no impact on gross profit.Cash and cash flow
A recent (July 2022) equity financing provided HCTI with $5.8M in net proceeds. Although HCTI has been opportunistically repurchasing its own shares, we would prefer that management allow cash to build on its balance sheet rather than deploy capital more aggressively toward repurchases, given the challenging macro backdrop. Free cash flow (FCF) was positive in 1Q and 2Q and we expect FCF generation to remain sound across the next several quarters.