WOOF

VCA Inc

Healthcare


Presented:09/08/2016
Price:$72.01
Cap:$5.89B
Current Price:$4.62
Cap:$1.27B

Presented

Date09/08/2016
Price$72.01
Market Cap$5.89B
Ent Value$6.83B
P/E Ratio25.72x
Book Value$17.02
Div Yield0%
Shares O/S81.73M
Ave Daily Vol605,896
Short Int2.42%

Current

Price$4.62
Market Cap$1.27B
VCA, Inc. engages in the provision of veterinary services and diagnostic testing to support veterinary care. It operates through the following segments: Animal Hospital and Laboratory. The Animal Hospital segment includes the operation of animal hospitals and provision of pharmaceutical and retail products for pet wellness programs, health examinations, diagnostic testing, routine vaccinations, spaying, neutering and dental care. The Laboratory segment involves testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment, and prevention of diseases and other conditions affecting animals. The company provides various communication, marketing solutions and other services to the veterinary community, and also engages in the sale of diagnostic imaging equipment and other medical technology products which are related to the veterinary market. VCA was founded by Robert L. Antin, Arthur J. Antin and Neil Tauber in 1986 and is headquartered in Los Angeles, CA

Publicly traded companies mentioned herein: IDEXX Laboratories Inc (IDXX), VCA Inc (WOOF)

Highlights

The presenter views VCA Inc (WOOF) as a combination of two good, animal-focused businesses (animal hospitals and animal laboratory/ diagnostics) and he is long the stock at this time ($72). WOOF has the top market share in the highly fragmented animal hospital segment, and it operates in an oligopoly with Idexx on the laboratory side. His 2018 EPS forecast of $4.50 - $5 is meaningfully ahead of the Street (~$3.70) due to his modeling of incremental margins in each business, accretion from capital allocation, and the tax advantages of recent M&A activity. At 20x his estimate, which he believes to be fair and potentially conservative as WOOF trades at 24x 2016 Street estimates today - the stock could reach $100+ over the next 12 - 24 months.

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