Harsh flu season could be a boon for hot stock of vitamin-maker Jamieson
In an up-and-down year for Canadian IPOs, shares of Torontobased vitamin-maker Jamieson Wellness Inc. have been on a steady rise since their July debut.
Jamieson’s stock price closed Friday at $21.05, up 4.05 per cent for the day and more than 21 per cent since the company’s shares first hit the Toronto Stock Exchange. Meanwhile, the S&P/TSX Composite index is up just five per cent for the year.
Now expectations of a harsh flu season have some predicting Jamieson’s momentum will continue through winter, too.
The company announced thirdquarter earnings last week, reporting net income of about $1.1 million on revenue of $80.1 million, the latter being an increase of 45 per cent from the same period of 2016. While Jamieson’s net income was down from $8.3 million for the same quarter last year, the company said its results were curtailed somewhat by costs tied to share sales.
Adjusted net income, excluding the non-operating costs, actually jumped 210 per cent to $7.8 million for the quarter, up from $2.5 million, due in part to higher sales volumes.
On Thursday, BMO Capital Markets upped its target price on Jamieson to $22 per share from $21, and kept its outperform rating on the stock.
“Overall, we believe the impact of the quarter to be positive,” wrote BMO Capital Markets analyst Peter Sklar. “We continue to believe Jamieson will benefit from its dominant brand position, strong management team, and ability to generate significant free cash flow.”
National Bank Financial maintained its $22.25 target price and outperform rating on Jamieson shares, saying its results had been “in line” with expectations.
“Given Jamieson’s positive attributes, the growing Canadian (vitamin, mineral, and supplement) consumption and international market opportunity, we believe the company is in a favourable position to hit its growth targets and consequently narrow the valuation gap with peers,” National analyst Endri Leno wrote.
Jamieson, a 95-year-old maker of vitamins and natural health products, was bought by U.S. private-equity firm CCMP Capital Advisors in 2014 for what was reportedly around $300 million, and an attempt at selling the company last year was ultimately called off, according to Bloomberg.
After the July IPO, CCMP sold all of its common shares of Jamieson in an October secondary offering, the company’s financial statements said.
But post-IPO Jamieson could be on track to continue its gains throughout the winter, despite narrowing its revenue outlook range for this year.
Jamieson is touting one of its newer offerings, a purportedly preventive “Cold Fighter” supplement, which it claims “fights early signs of cold and flu symptoms.”
“Retailers and consumers have been asking for innovation in the cough and cold category for quite some time, and we believe we’ve delivered that as only Jamieson can,” company president and chief executive Mark Hornick said on the firm’s third-quarter conference call. “So far we’re off to a good start.”
A product boasting similar qualities, Valeant Pharmaceuticals owned Cold-fX, has despite its popularity faced questions about its effectiveness, although an attempt at a class-action lawsuit in British Columbia was dismissed in November 2016.
In responding to Jamieson’s Q3 results, Sklar wrote that “the domestic, Jamieson-branded products performed well, including the recently launched Cold Fighter product, which began shipping in August and will continue to rampup into Q4/17.”
Leno said last week that experts have taken note of an ugly flu season in Australia — a potentially good thing for Jamieson.