Its properties are considered the Club Med for seniors, but investors in Amica Mature Lifestyles Inc. haven't been feeling very rich lately thanks to the company's sagging stock price.
Shares of Vancouver-based Amica have fallen about 17 per cent over the past year amid investor concerns over debt issues and an oversupply of seniors' residences in the Canadian market.
While the stock price has been disappointing for investors, some see it as a buying opportunity given the company's niche luxury market combined with the growing population of seniors.
"We think Amica represents pretty compelling value right now," said Andy Nasr, managing director and senior portfolio manager at Middlefield Capital Corp.
His company has been buying Amica shares recently, as the stock trades at its lowest level since late 2011.
Mr. Nasr is also encouraged by the rising occupancy rate at Amica's 24 residences across Ontario, British Columbia and Alberta. Amica says its occupancy was 94.1 per cent at the end of February compared to 92.5 per cent for the same time last year.
Analysts are largely bullish on Amica. Of the eight analysts that cover the stock, seven have a "buy" or equivalent recommendation and one has a "hold," according to S&P Capital IQ. The analyst consensus price target over the next year is $9.32.
That's more than 20 per cent higher than where the stock currently trades. Amica shares closed at $7.70 on the Toronto Stock Exchange on Tuesday.
"The stock has been a bit out of favour because of the leverage. I think it's a great opportunity," said GMP Securities analyst Jimmy Shan, who has a "buy" on the stock and a $9.75 target price.
He also sees a "catalyst coming" with a pending sale and redevelopment of Arbutus Manor, one of Amica's properties in a high-priced area of Vancouver. Proceeds from the deal could be used to pay down debt or fund future growth.
The company is also restructuring debt concerning a couple of joint-venture properties in Ontario, which is short-term pain for what analysts believe will bring longer-term stability of its books. The company forgave debt totalling $4.3-million in connection with the two restructurings. It also said another restructuring is expected for a third property.
"We believe recent investment restructurings and the realization of proceeds from the Arbutus transaction will help improve Amica's balance sheet and reduce the company's risk profile," BMO Nesbitt Burns analyst Heather Kirk said in a recent note.
Investors may also gain confidence from the number of shares owned by company founder, chairman and chief executive Samir Manji. He owns about 13 per cent of the company's shares, and the Manji family together own approximately 27 per cent.
Some analysts are encouraging investors to get in now while the stock is cheap, but not because of the company's huge growth potential.
"It's an opportunity that is attractively priced, but there is no catalyst for the company that will get you a lot of price appreciation," said Dundee Capital Markets analyst Yashwant Sankpal, who has a "buy" on the name, citing the niche strategy and premier brand.
Mr. Sankpal recently cut his target price to $9.40 from $10, citing "haircuts" the company took on its recent debt restructurings.
CIBC World Markets analyst Brad Sturges is a little less rosy on the stock, with an $8.50 price target and a "sector performer" rating, which is the equivalent of a "hold."
"It's a name that could deliver significant cash flow growth over the long term," he said. "But I think that's reflected in the current valuation, which we think is fair."
He prefers competitor Chartwell Retirement Residences, which also operates retirement and long-term care homes for seniors.