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AMN Healthcare (AMN) Hits New 52-Week High: What's Driving 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 $96.91 on Jun 15, before closing the session marginally lower at $96.77.

Shares of the company have gained 114.1% in the past year compared with the industry’s 14.4% growth and the S&P 500's 38.5% rise.

The company is witnessing an upward trend in its stock price, prompted by its robust first-quarter 2021 results. The company’s broad array of services and strength in staffing service also buoy optimism. However, a stiff competitive landscape and dependence on third parties are concerning for the company.

Zacks Investment Research
Zacks Investment Research

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Let's delve deeper.

Key Growth Drivers

Staffing Service Strength: AMN Healthcare’s staffing services have been instrumental in driving its top line in recent times. The Nurse and Allied Solutions and Other Workforce Solutions units offer services like travel nurse staffing, allied staffing, rapid response nurse staffing and others. In the first quarter of 2021, the Nurse and Allied Solutions segment’s revenues surged significantly year over year. Travel nurse staffing and Allied division revenues also demonstrated year-over-year growth.

Broad Array of Services: AMN Healthcare’s business has gradually evolved beyond traditional healthcare staffing, raising optimism. The company has become a strategic workforce solutions partner with its clients, which is impressive.

Further, the company has also displayed strength in digital health capabilities with its AMN Passport and AMN Cares. The first one is the company’s mobile app for healthcare experts, while the latter is a telehealth platform allowing care teams to interface with employees or patients at home. The company also expanded its scalable vendor management systems (“VMS”) solution, enabling a wide array of health care facilities to quickly staff and manage their entire range of contingent talent.

Strong Q1 Results: AMN Healthcare’s solid first-quarter 2021 results raise market sentiments. The company recorded strength in segmental performance in the first quarter. Robust growth in the company’s VMS business, and strength in the locum tenens business in the quarter, are impressive. Management continues to be upbeat about the acquisitions of Stratus Video and b4 Health, which continue to contribute to the company’s favorable performance. Continued momentum of the telehealth platform also drove the share price.

The company’s foray into the post-acute care market with the acquisition of the telehealth company Synzi, in April, is encouraging as well.

Downsides

Dependence on Third Parties: AMN Healthcare outsources and offshores certain critical applications or business processes to external providers, including cloud-based, credentialing and data processing services. Hence, the failure or inability to perform by one or more of these critical suppliers could cause significant disruptions and raise costs for the company.

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 professionals. Larger firms 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.

Zacks Rank & Other Key Picks

Currently, AMN Healthcare carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks from the broader medical space are Veeva Systems Inc. VEEV, Henry Schein, Inc. HSIC and National Vision Holdings, Inc. EYE.

Veeva Systems’ long-term earnings growth rate is estimated at 15.8%. The company presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Henry Schein’s long-term earnings growth rate is estimated at 11.2%. It currently carries a Zacks Rank #2.

National Vision’s long-term earnings growth rate is estimated at 23%. It currently sports a Zacks Rank #1.

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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report

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