'Much-needed clarity': Bay Street applauds Medical Facilities' new business model
BNN Bloomberg
Shares of Medical Facilities Corp. surged during an otherwise bruising North American trading session on Tuesday after the Toronto-based owner of American surgical facilities announced it was backing away from its growth-by-acquisition strategy.
“[Medical Facilities] plans to suspend acquisitions, divest its non-core assets, pursue overhead cost reductions, and evaluate and implement strategies to return capital to its shareholders, including [a share buyback program],” the company wrote in a press release.
The announcement prompted analysts at iA Capital Markets to upgrade their rating of Medical Facilities to “buy” from “hold”.
“[This] clearly ends the experiment to allocate income to growth by acquisition instead of returning income to shareholders, and we expect a material increase of the dividend once the strategic change is implemented,” wrote iA Capital analyst Paul Stewardson in an email to BNN Bloomberg.
