AmSurg Corporation (AMSG)

AmSurg Corporation (AMSG - Analyst Report) is a leading operator of single-specialty practice-based ambulatory surgery centers (ASCs) in the U.S. The company recently reported net earnings from continuing operations of $12.862M (up 13% y/y) with EPS of $0.40 in-line with consensus estimates.

The quarter was characterized by a solid increase in procedure volume (up 9.5% y/y) despite essentially flat y/y same-store revenues, which reflected the impact of Medicare reimbursement cuts and the weaker economy. Nonetheless, the stock has been under further pressure given uncertainties related to healthcare reform and potential changes to Medicare.

We believe the stock has been oversold and move to a Buy recommendation at current levels. We have valued shares of AmSurg on a forward price/earnings (P/E) basis, as well as in comparison to similar firms in the healthcare facilities sector. Our $20 target price represents a multiple of 12x our FY09 EPS estimate of $1.66.