The health care overhaul's upcoming coverage expansion and consolidation in the physician practice management industry should help spur growth for Envision Healthcare Holdings Inc., according to analysts who have started covering the company.
Greenwood Village, Colo.-based Envision held an initial public offering of its stock last month. Shares closed at $25.15 on Aug. 14, their first trading day, and have since climbed to close at $26.84 on Friday. For the IPO, the company priced 42 million shares at $23 each, which represented the high end of the range it expected.
The company provides physician services in areas like emergency, hospitalist and inpatient care and medical transportation that includes air ambulances and disaster response. It operates American Medical Response Inc., which has more than 12,000 paramedics and emergency medical technicians.
Cantor Fitzgerald analyst Joseph D. France started coverage of the stock with a "buy" rating and a $32 price target.
"We believe that these businesses are highly complementary and that the company will continue to grow as the population ages, cost pressures increase the percentage of these businesses that are outsourced, and the industry consolidates in order to become more efficient," France wrote.
Goldman Sachs analyst Brian Zimmerman started coverage of the stock with a "neutral" rating and a $26 price target.
Zimmerman also thinks industry consolidation will help the company grow. He also noted that the health care overhaul may improve Envision's reimbursement as it expands to cover millions of uninsured people over the next few years. The company is highly exposed to self-pay patients who do not have insurance coverage.
But Zimmerman also noted that these potential drivers for growth are likely priced into the stock already.