HMS Holdings Corp. HMSY is well poised for growth on the back of strong Payment Integrity Solutions and Total Population Management, and solid margins.
Shares of HMS Holdings have gained 2.8% compared with the industry’s growth of 2.1% in the past month. Meanwhile, the S&P 500 Index rallied 3.6% in the same timeframe.
The company, with a market capitalization of $2.65 billion, offers cost-containment solutions in the United States. The company also provides Coordination of Benefits (COB) services to the government and commercial healthcare payers. It anticipates earnings to improve 11% over the next five years. Moreover, it has beat estimates in the trailing four quarters by 23.3%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #2 (Buy).
What’s Favoring the Stock?
HMS Holdings continues to benefit from its promising and growing Payment Integrity Solutions. Payment Integrity (PI) has been gaining from greater throughput in the implementation process, expedited customer approvals for new PI edits, applied technology to simplify processes, increased coder productivity and accelerated revenue generation.
Per management, PI is anticipated to be a significant contributor to the Analytical Services wing in 2019.
Apart from PI solutions, Total Population Management (TPM) comes under HMS Holdings’ unique suite of Analytical Services. Notably, TPM has been gaining traction for a while now, which in turn has been contributing significantly to the top line.
Product-yield enhancements and process improvements are consistently bolstering HMS Holdings’ margins and profitability. The company has been diligently managing operating expenses and broadening the use of technology tools, such as robotic process automation and ML.
With these initiatives, the company has been exhibiting strong margins for the last few years and the momentum is expected to continue in the near term.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $634.2 million. The same for earnings stands at $1.34 per share, suggesting growth of 28.9% from the year-ago quarter’s reported figure.
Other Stocks to Consider
Investors interested in some other top-ranked stocks from the broader medical space can consider Patterson Companies, Inc. PDCO, West Pharmaceutical Services, Inc. WST and DENTSPLY SIRONA, Inc. XRAY, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Patterson Companies has an expected long-term earnings growth rate of 6.4%.
West Pharmaceutical has an estimated long-term earnings growth rate of 14%.
DENTSPLY SIRONA has a projected long-term earnings growth rate of 11.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HMS Holdings Corp (HMSY) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research