Here's Why You Should Retain Change Healthcare (CHNG) Stock
Change Healthcare Inc. CHNG is well poised for growth backed by strategic deals and robust payment accuracy business. However, stiff competition remains a concern.
The stock has gained 18.6%, compared with the industry’s rally of 32.7% in a year’s time. Also, the S&P 500 Index has rallied 11.1% in the same timeframe.
Change Healthcare — with a market capitalization of $4.36 billion — is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States. It anticipates earnings to improve 2% over the next five years. Moreover, the company has a trailing four-quarter earnings surprise 22.6%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Factor Hurting the Stock
The market for healthcare information technology (HCIT) solutions, devices and services is intensely competitive and rapidly evolving. Consequently, intense competition can put pressure on the company’s pricing and margins.
Key Catalysts
Change Healthcare has been implementing growth initiatives and integrating innovation across its platform.
During fiscal first-quarter 2021, the company launched Connected Consumer Health suite — an innovative new consumer and financial engagement platform partnership with Adobe and Microsoft — that will offer healthcare providers a modern and simplified experience throughout the patient journey. Patients will be able to get a modernized and improved experience by providing physician details, patient reviews, access to price comparisons and other features associated with their care, all on an integrated, scalable and secure platform.
Additionally, with respect to Payment Accuracy business, the company remains committed toward healthcare plans and payers generating double-digit growth for the same. The company’s end-to-end solution helps drive accuracy earlier in the payment cycle, lowering administrative costs and reducing friction.
In July, Change Healthcare introduced its clinical data retrieval service, which is a new cloud-based interoperability solution that helps payers and a broader range of organizations to instantly get the patient care data required in an integrated electronic fashion. This, in turn, will aid in the verification of claim accuracy, paying claims, managing risk profiles, satisfying quality reporting requirements and optimizing interventions.
Estimates Trend
For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $3.06 billion, indicating a decline of 7.3% from the year-ago period. The same for adjusted earnings per share stands at $1.18, suggesting a decrease of 23.9% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space include Biolase, Inc. BIOL, Thermo Fisher Scientific Inc. TMO and NextGen Healthcare, Inc. NXGN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Biolase has a projected long-term earnings growth rate of 15%.
Thermo Fisher has an estimated long-term earnings growth rate of 15%.
NextGen has a projected long-term earnings growth rate of 8%.
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