Here's Why You Should Retain Allscripts in Your Portfolio Now
Allscripts Healthcare Solutions, Inc. MDRX is gaining traction on lucrative deals, robust innovation-based pipeline and solid prospects in Sunrise EHR platform. However, a competitive environment has been offsetting the positives to some extent.
The company, with a market capitalization of $1.18billion, is the leading provider of IT solutions and services to healthcare organizations. The company anticipates earnings improvement of 9.8% overthe next five years. Also, this Zacks Rank #3 (Hold) company has a trailing four-quarter positive earnings surprise of 5.3%, on average.
In the past month, the stock has rallied 26.8% compared with 16.6% growth of its industry.
Let’s delve deeper into the factors working in favor of the company.
Profitable Deals: In recent times, Allscripts announced a tie-up with Microsoft focused on implementing an innovative, integrated model for clinical research, aiming to enhance clinical research design, conduct studies more efficiently and improve the research provider and participant experience.
Rising Innovation: Management at Allscripts confirmed the achievement of innovation milestones in recent times. Of the most exclusive ones, the company unveiled Avenel, a next-generation cloud-based EHR that creates a community-wide shared patient record. Furthermore, Allscripts and Lyft, the fastest growing rideshare companies in the United States, will be joining forces to incorporate non-emergency transportation directly into physicians' workflow.
Per the fourth-quarter 2019 earnings call, the company has released smart pump integration. This optimization of clinical workflows has enabled clients to enhance clinician efficiency, thereby achieving significant return on investment (ROI) in patient safety results. This is also expected to continue driving growth for the company in the near future.
Solid EHR Prospects: We believe that the Sunrise and Paragon EHR platform is an important growth driver for Allscripts. For investors’ notice, Allscripts Sunrise is a fully-integrated EHR platform that connects all clinical and financial aspects of a hospital or health system for inpatient, emergency and outpatient care.
During fourth-quarter 2019, the company extended managed services agreement with Northwell Health through 2026.
In the fourth quarter, PIH Health extended its solutions and services agreements with Allscripts until 2025 and agreed to expand Sunrise to a newly-acquired hospital. Additionally, Memorial Sloan Kettering Cancer Center extended its Sunrise agreement through 2026.
However, there is a concerning factor marring growth.
Cut-throat Competition: Larger players such as Epic and Cerner are likely to have an advantage over smaller companies in winning stimulus-driven contracts. These companies compete against Allscripts with a far simpler rationale for their products. Further, some competitors such as Cerner have developed unified and seamless products serving both the inpatient and outpatient segments.
Estimates Trend
The company is witnessing a negative estimate revision trend for fiscal 2020. Over the past 30 days, the Zacks Consensus Estimate for its loss has declined 1.4% to 72 cents per share.
The Zacks Consensus Estimate for the company’s first-quarter 2020 revenues is pegged at $423.9 billion, suggesting a 2% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks from the broader medical space are ResMed Inc. RMD, DexCom DXCM and Surmodics SRDX.
ResMed has a projected long-term earnings growth rate of 12%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom’s long-term earnings growth rate is estimated at 36.7%. The company presently carries a Zacks Rank #2.
Surmodics’ long-term earnings growth rate is estimated at 10%. It currently carries a Zacks Rank #2.
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
Allscripts Healthcare Solutions, Inc. (MDRX) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Surmodics, Inc. (SRDX) : Free Stock Analysis Report
ResMed Inc. (RMD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
