Physitrack (No_rec, TP: SEK) - Discontinuing coverage

We have discontinued our regular coverage of Physitrack, and our last published recommendation, target price and estimates should no longer be relied upon. Going forward, we plan to cover Physitrack ‘powered by Redeye’.

Northern Lights

Physitrack (Buy, TP: SEK34.00) - At the profitability trough

We see Physitrack’s Q1 results as a step in the right direction but believe management will have to continue to demonstrate that it can balance its high growth ambitions with a trough in EBITDA margins and cash flows over the coming quarters to ease investor concerns about funding. We reiterate our BUY but have cut our target price to SEK34 (40), as we see fundamental upside potential in the stock, although we acknowledge that the limited liquidity caps the potential investor base at this stage.

Northern Lights

Physitrack (Buy, TP: SEK40.00) - FCF break-even needed

Physitrack continues to show solid revenue growth, though incremental margins and cash flow remain below our expectations as a result of the ongoing revenue mix shift and higher investments needed to consolidate recent acquisitions into one holistic wellness platform. We believe we are at a trough for negative margin and cash flow progression, but see a potential share-price catalyst in FCF reaching break-even in H2 2023e. The stock is trading close to the ~SEK15 level at which the co-founders c...

Northern Lights

Physitrack (Buy, TP: SEK41.00) - Cash conversion past the trough

We continue to see large upside potential for Physitrack’s shares. However, we note the burden of proof is on the company to show 1) it is past the trough for margins and cash-flow trajectory on a non-adjusted basis; and 2) sustained 20–30% organic growth YOY in a weaker macro environment. We have cut our 2023–2024e adj. EBITDA by 12% on average and thus reiterate our BUY but have lowered our target price to SEK41 (49).