Back to top

Analyst Blog

On Sep 19, we reiterated our recommendation on Allscripts Healthcare Solutions, Inc. (MDRX - Analyst Report) at Neutral. Although its second-quarter 2013 revenues and earnings missed the Zacks Consensus Estimates, bookings improved significantly in the quarter, driven by new and upgraded products.

Why the Retention?

On Aug 8, Allscripts Healthcare posted a significant fall in adjusted earnings to $2.2 million or a penny per share in the second quarter of 2013 from $23.1 million or 13 cents in the comparable quarter of 2012. With this, earnings also missed the Zacks Consensus Estimate of 7 cents for the quarter. Revenues in the quarter ebbed 6.8% to $344.8 million, again missing the Zacks Consensus Estimate of $358 million.

The company’s earnings have failed to beat the Zacks Consensus Estimate in 3 out of the last 4 quarters, with an average negative surprise of 44.64%. Following the earnings release, the Zacks Consensus Estmate for 2013 remained unchanged at 20 cents per share over the last 30 days. However, the estimate for 2014 decreased 2.4% to 41 cents over the same period. Currently, the stock has a Zacks Rank #3 (Hold).

Following a period of multiple disruptions, Allscripts Healthcare is trying to turn around its business on the back of fresh initiatives. We believe that the company’s restructuring efforts are beginning to pay off. The recent improvement in bookings has reinstated client confidence in Allscripts Healthcare’s new offerings.

MDRX continues to benefit from the movement among medical providers seeking to comply with federal EHR requirements. Further, its non-EHR offerings for the untapped HCIT market, such as population health management and care coordination, are considered to be future growth drivers. The acquisitions of dbMotion and JarDogs should boost Population Health Management revenues. However, Allscripts Healthcare’ ability to integrate acquisitions remains to be proven.

MDRX faces strong competition from large players such as Cerner (CERN - Analyst Report) and athenahealth (ATHN - Analyst Report) in a fragmented market. Additionally, the company’s system sales continue to decline, which is a cause of concern. The lingering global economic weakness presents substantial risk for Allscripts Healthcare.

Other Stocks to Consider

Currently, medical information systems stock Medidata Solutions, Inc. (MDSO - Snapshot Report) warrants a look. It carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%