Virtus Health Ltd

VRT Details
·         Recovering sentiment on the stock: Virtus Health Ltd (ASX: VRT) stock rallied over 4% on May 03, 2017 with improving sentiments. The stock was under pressure as they posted weak interim results, wherein the revenue lost 0.7% to $131.4 million during the first half of 2017. The group cycles lost 3.8% to 9,410 during the first half of 2017 as compared to 9,782 in the prior corresponding period. Australian Virtus cycles lost 7.2% during the period while the group’s EBITDA lost 12.3% on a year on year (yoy) basis to $31.7 million. The group’s Australian segment EBITDA lost 13.1% to $33.9 million while the International segment EBITDA improved by 11.7% as compared to the prior corresponding period (pcp).

·         Recommendation:VRT stock fell over 4.5% in this year to date (as of May 02, 2017) but recovered over 13.1% in the last three months. The group is addressing their domestic underperformance while the overall demographic drivers for their assisted reproductive services (ARS) growth remain on track. We give a “Hold” recommendation on the stock at the current price of $ 6.18
 

Growing ARS market (Source: Company Reports) 

iSentia Group Ltd

ISD Details
·         Implementing long-term strategy to revamp growth:iSentia Group Ltd (ASX: ISD) stock surged over 13% on May 03, 2017 post the release of their recent Macquarie Australia Conference presentation. By 2020, the group’s strategy is to enhance their product offering while optimizing their platforms for growth. Moreover, the group is aiming to strengthen their positions in the high growth markets. The group is strengthening their position in the Asian market while entered South Korea market in the fourth quarter of year 2016. The group intends to leverage technology to enhance their SaaS penetration while aiming to further expand the VAS products via cross-sell opportunities. Meanwhile, management reported that ISD is integrating Content marketing sales into sales teams, and accordingly, targeting cross-sell into Isentia client base. The group maintained their earlier guidance and expects FY17 revenue to be in line with consensus estimate of $162m while underlying EBITDA is expected to be in line with consensus estimate of $44m.

·         Recommendation:ISD stock lost over 56.8% in the last six months (as of May 02, 2017). Keeping in view the volatility seen earlier and the prospects highlighted through recent updates, we give a “Speculative Buy” recommendation on the stock at the current price of $ 1.65

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