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Here's Why You Should Hold NextGen (NXGN) in Your Portfolio Now

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Zacks Equity Research
·4 min read
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NextGen Healthcare, Inc. NXGN is well poised for growth on a plethora of product launches and a solid trend in electronic health record (EHR) markets. However, tough competition has been offsetting these positives.

Shares of NextGen Healthcare have gained 7.1% against the industry’s decline of 9.8% in the past three months.

The company, with a market capitalization of $1.27 billion, is a developer and marketer of healthcare information systems. It anticipates earnings improvement of 4% over the next five years. Moreover, its earnings beat estimates in each of the trailing four quarters by 49.2%, on average.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold) status.

Solid Demand for NextGen Solutions: Through the fiscal third quarter, the company continued to demonstrate strength in its NextGen integrated ambulatory platform. It plans to further capitalize on the success of its integrated solution by shifting its client base onto its Spring ‘21 release, which leverages its new patient experience platform.

In December 2020, management announced that its client Bridges Health Partners LLC managed to boost quality of patient care and attain value-based care financial goals throughout its wide network of 1,100 physicians with the aid of NextGen Population Health. Further, the company informed that its NextGen Health Data Hub (HDH) is chosen by HI-BRIDGE HIE (health information exchange). This will enable HIE administrators to build rules-driven data exchange to facilitate automated routing of patient information across the group of care. Also, in the same month, the company announced that NextGen Enterprise is selected by Orthopaedic & Sports Medicine Center (OSMC) as its core EHR and practice management (PM) solution.

Big Data-Based EHR System: EHR services in the U.S. MedTech space have been gaining prominencefor a while now.

In January 2021, the company announced that FPA Women’s Health deployed its integrated NextGen Patient Experience Platform to offer continuity of care during the COVID-19 pandemic. Notably, FPA Women’s Health is a mid-sized specialty medical group committed to women’s healthcare. Integration with the NextGen Enterprise EHR for patient self-scheduling and virtual visit solutions reduced the risk of duplicative chart problems. This, in turn, will likely bolster NextGen’s presence in the global healthcare information technology (HCIT) space.

Again, in the same month, the company announced that its renowned cloud-based EHR platform NextGen Office managed to facilitate provider-owned healthcare practices across the United States. Notably, the NextGen office solution will act as a financial cushion amid the COVID-19 health crisis and maintain business stability.

This is expected to be driving growth in the long term.

However, there is a factor marring growth.

Cutthroat Competition in the HCIT Space: The HCIT market is highly competitive. Also, the industry is exceedingly fragmented and includes numerous players.

Which Way Are Estimates Headed?

For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $552.4 million, indicating a rise of 2.3% from the prior-year period. The same for earnings stands at 96 cents per share, suggesting a rise of 15.7% from the year-ago reported figure.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Align Technology ALGN , Abbott Laboratories ABT and Hologic HOLX. While Align Technology currently sports a Zacks Rank #1 (Strong Buy), the other two presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has a projected long-term earnings growth rate of 19%.

Abbott has a projected long-term earnings growth rate of 14.1%.

Hologic has an estimated long-term earnings growth rate of 15.4%.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

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