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AMN Healthcare (AMN) Hits 52-Week High: What's Behind It?

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·4 min read
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Shares of AMN Healthcare Services, Inc. AMN reached a new 52-week high of $129.12 on Dec 27, before closing the session marginally lower at $124.24.

Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 81.8% compared with 29.1% rise of the S&P 500 composite. The industry fell 58.4% in the said time frame.

AMN Healthcare is witnessing an upward trend in its stock price, prompted by its broad array of services. AMN Healthcare’s overall robust performance in the third quarter of 2021, along with its solid segmental performances, buoys optimism. Consolidation of healthcare delivery units and stiff competition are the major downsides.

Zacks Investment Research
Zacks Investment Research

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Let's delve deeper.

Key Growth Drivers

Broad Array of Services: Investors are upbeat about AMN Healthcare’s business’ gradual evolution beyond traditional healthcare staffing. The company has become a strategic total talent solutions partner for its clients. In addition to its healthcare professional staffing and recruitment services, the company’s suite of healthcare workforce solutions includes Managed Services Program, vendor management systems (“VMS”) and medical language interpretation services, among others.

The company has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. AMN Healthcare also expanded its scalable VMS solution, enabling a wide array of health care facilities to quickly staff and manage their entire range of contingent talent.

Solid Segmental Performance: All three of AMN Healthcare’s reportable segments witnessed robust performances in the third quarter of 2021, raising investors’ optimism. The Nurse and Allied Solutions segment recorded strong year-over-year revenues. Travel nurse staffing and Allied division revenues also surged year over year. Strength in Physician and Leadership Solutions segment’s year-over-year revenues was driven by robust growth in Locum tenens revenues. Interim leadership revenues, and Physician and leadership search businesses also saw solid revenue growth year over year.

The Technology and Workforce Solutions segment also performed well year over year. Year-over-year revenue uptick was also recorded in the Language services business as well as the VMS business.

Strong Q3 Results: AMN Healthcare’s better-than-expected results in third-quarter 2021 buoy optimism. The company recorded robust performances across each of its core segments, and both earnings and revenues improved in the quarter under review. Per management, increased healthcare utilization and a tight labor market have led to record high demand in several areas of the company’s business. This, in turn, bodes well for AMN Healthcare’s collaborations and innovations, which are intended to provide greater access to patient care, thus fueling further confidence. Expansion of both margins bodes well for the stock. An upbeat revenue guidance for the fourth quarter of 2021 is encouraging.

Downsides

Consolidation of Healthcare Delivery Units: Healthcare delivery organizations are consolidating, which is providing them with greater leverage in negotiating pricing for services. Consolidations may also result in AMN Healthcare losing its ability to work with certain clients because the party acquiring or consolidating with its client may have a previously established service provider they opt to maintain. These dynamics, individually or collectively, could negatively affect pricing for the company’s services and its ability to maintain certain clients.

Stiff Competition: AMN Healthcare faces significant competition in the Medical Services industry. The company competes in national, regional and local markets for healthcare organization clients and healthcare professionals. Larger firms, such as AMN Healthcare, also generally have a deeper, more comprehensive infrastructure with a more established operating model and processes that provide the long-term stability and foundation for quality standards recognition.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings LH or LabCorp, Thermo Fisher Scientific Inc. TMO and Abbott Laboratories ABT.

LabCorp, flaunting a Zacks Rank #1, has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.

LabCorp has gained 51.7% compared with the industry’s 17.3% rise over the past year.

Thermo Fisher has an estimated long-term growth rate of 14%. TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2 (Buy).

Thermo Fisher has gained 43.1% compared with the industry’s 10.5% rise over the past year.

Abbott, having a Zacks Rank #2, has an estimated long-term growth rate of 12%. ABT’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 18.47%.

Abbott has gained 30.6% against the industry’s 4.2% fall over the past year.


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