They consider their current EBITDA estimates of $75 million in 2007 and $81 million in 2008 to be wildly conservative. These estimates do not include 1) contribution from recently announced acquisitions (Borg Imaging and Rockville Open MRI), 2) contribution from new, unannounced acquisitions, 3) Radiologix synergies (projected to be $11 million), or 4) better-than-expected organic growth.
Also, the firm believes RDNT may refinance its $405MM senior secured credit facility with GE Financial Services some time later this year, reducing annualized interest expense and improving cash flow by $5-$6 million.
Channel checks indicate that consolidation opportunities in the space are increasing as financial pressure resulting from the recent implementation of the DRA cuts on imaging services intensify.
Notablecalls: Looks like Jeffco's target represents 45% upside from current levels. The chart looks good and so does the story. I think this one may indeed see some serious upside over the next 6 months or so. Also, there is currently very little sell-side coverage on RDNT. Think that may be changing, too.
Disclosure: Author has no position in RDNT
RDNT 1-yr chart: