WELL Stock: Buy, Sell, or Hold?

WELL stock has a lot of upside as the company is likely to continue to grow, posting positive earnings in the next year.

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WELL Health Technologies Corp. (TSX:WELL) has rapidly grown over the last few years – from just $32 million in revenue in 2019, to $776 million in 2023. While WELL stock is up 456% during this same time period, it’s fallen 62% from its 2021 highs.

What should investors do with this stock today?

WELL stock is a volatile one but the business keeps growing

Although WELL stock has been all over the place in the last few years, its growth trajectory has not – it’s been pretty consistently up. In fact, WELL Health’s revenue has grown over 2,000% to $776 million in 2023. The problem, however, is that earnings have been hard to come by. While this is typical of new and emerging companies, the market doesn’t like this. And today’s environment is especially averse to companies operating at net losses.

Different markets are more receptive to the more risky, big potential stocks like WELL Health. Today, significantly higher interest rates have hit stock valuations and present a risk for stocks like WELL Health. Also, the sentiment has shifted to a more risk averse one, and this does not bode well for stocks like WELL Health.

But it’s okay, because we prefer stocks that are trading off of fundamentals.

Underlying fundamentals remain strong

Despite the current losses at WELL Health, its business is growing and very much in demand. Health care systems are benefiting tremendously from the digitization that WELL Health enables. For example, wait times are being reduced, virtual appointments bring convenience to the picture, and doctors’ time is being freed up to focus more on patient care.

These are just some of the more straightforward benefits that WELL Health brings. Beyond this, the company has launched WELL Longevity+ Program, which focuses on preventative health. This program uses advanced precision diagnostics and AI technologies for the early detection of serious health conditions.

Leveraging technology in these ways has the potential to drastically improve health outcomes.

Earnings will be WELL stock’s catalyst

If investors are as excited as I am about this disruptive and revolutionary business, it’s hard to tell by looking at WELL’s stock price action.

This is because trading in WELL stock has been very much a sentiment game. It reached its highs based on pretty big excitement, which I believe was warranted. However, the price did get ahead of itself, so it’s good that it’s come back down to reality. Because now we can focus on the fundamentals and value the stock off of fundamentals.

Looking ahead, we can expect WELL Health to approach $1 billion in revenue and profitability very soon. In fact, in 2024, revenue is expected to come in between $950 and $970 million. Also, analyst earnings estimates are rising quickly. In 2024, WELL Health is expected to post a net loss of $0.03 per share (up from the previous estimate of a loss of $0.10). Also, in 2025, WELL Health is expected to post EPS of $0.17 (up from $0.11), and in 2026 expectations are calling for EPS of $0.40 (up from $0.24).

In conclusion, for those investors who are willing and able to put up with the volatility, I would definitely say that WELL stock is a buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas has a position in WELL Health Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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