If you have a high tolerance for risk, then it could be worth checking out the small-cap ASX share in this article.
That's because the team at Bell Potter has just put a buy rating on its shares. Let's find out why it has turned bullish.
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Which small-cap ASX share?
The share that Bell Potter has turned bullish on is Doctor Care Anywhere Group PLC (ASX: DOC).
It is a UK-based telehealth company aiming to provide high quality, timely, and efficient primary and secondary care to patients, whilst reducing the overall cost of providing clinical services.
Bell Potter notes that it currently provides approximately 60,000 telephone/video consults per month. The vast majority of these are provided to the families of policy holders of a large private health insurance group operating in the UK.
The broker highlights that the small-cap ASX share has just announced an acquisition in the UK market, which it has described as a "pivotal moment" for the company. It said:
The acquisition of MedicSpot in the United Kingdom marks a pivotal moment in the company's evolution. It broadens the business from a single-client service provider driving +90% of revenues to a more diversified platform with the capability to serve the broader market for corporate healthcare which we believe has distinct advantages over competitors focussed on direct-to-consumer (D2C).
MedicSpot is a healthcare and wellness platform currently targeting the direct-to-consumer market in the UK. The major assets include the website (medicspot.co.uk) and the estimated 2,500 customers ordering GLP-1 weight loss products each month, generating the estimated £5.3m in annual revenue. DOC also inherited a headcount of just 11 persons who continue to operate the business.
The broker points out that this deal fixes a shortcoming in its offering which bodes well for future tenders. It explains:
Weight management programs are key to virtually every new tender in this market and this element has been a shortcoming for DOC to this point. The combination of the weight loss program with the existing offering for GP, musculoskeletal and mental health services is absolutely unique in the UK with no competitor offering this combination from a single platform.
Big potential returns
According to the note, Bell Potter has upgraded the small-cap ASX share to a buy rating (from hold) with an improved price target of 24 cents (from 20 cents).
Based on its current share price of 13.7 cents, this implies potential upside of 75% for investors over the next 12 months.
Commenting on the upgrade, Bell Potter said:
We believe the acquisition of MedicSpot for just £850K represents deep value. The business is close to breakeven at EBITDA while providing DOC with immediate access to the D2C wellness market which the company will rapidly adapt to the large corporate market. Following the acquisition we upgrade our recommendation from Hold to Buy. PT amended to $0.24 from $0.20.
