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Here's Why Investors Should Buy Amedisys (AMED) Right Now

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Amedisys, Inc.  (AMED - Free Report) , renowned home health and hospice services provider, has rallied 3.6% over the last six months, ahead of the S&P 500’s 2.9% gain. The stock has a market cap of $1.7 billion. The company’s five-year historical growth rate is also favorable at 17.5% as compared to 12.4% of the broader industry.

Also, the company represented a return of almost 3.6%, in comparison to the broader industry’s decline of 8.2% over the last six months.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick at present.

The company’s estimate revision trend for the current year has also been positive. In the past 60 days, five analysts moved their estimates north, with no movement in the opposite direction. The magnitude of estimate revision increased around 6.2% to $2.22 per share over the same time frame.

Let’s find out whether the recent positive trend is a sustainable one.

Recently, Amedisys ended the second quarter of 2017 on a solid note, with earnings and revenues beating the year-ago figures. Also, at Hospice, the company registered strong growth across all segments.

Amedisys is currently exploring opportunities in the Home Health and Hospice segments. The company’s favorable demographic trend and strategic acquisitions encourage us as well. Moreover, the company has been witnessing growth in the personal care segment on synergies from acquisitions.

We are encouraged by the company’s long-term strategy to evolve from a traditional home health and hospice care company to one focused on bringing home a continuum of care to better serve patients and diversify sources of payment so as to become less reliant on Medicare. In this regard, the company experienced an improvement in non-Medicare revenues in comparison with the declining Medicare revenues within the Home Health division as seen in the last reported second quarter.

The home health industry is poised for substantial growth in the long term driven by the positive demographic trend in the United States. The company should continue to benefit from the aging demographics of the U.S. population and the need for higher acuity patients in a home nursing environment. 

Notably, the company is on track to fortify its footprint in the market place. Recently, it announced the completion of National Readmission Prevention Collaborative (NRPC) certification program by its clinical programs team that handles the progress and delivery of home healthcare programs.

Additionally, the company’s strong cash balance position bolsters our confidence in the stock.

On the flip side, we expect synergies from the Tenet Healthcare acquisition may escalate costs and operating expenses weighing on the company’s margins. Also, an intense competitive landscape and regulatory concerns continue to pose challenges in the home health and hospice industry.

Other Key Picks

Other top-ranked medical stocks are Edwards Lifesciences Corp. (EW - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and Stryker Corporation (SYK - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and Stryker carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 19.4% over the last six months.

Stryker has a long-term expected earnings growth rate of 10.00%. The stock has rallied roughly 12.8% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 28.6% over the last six months.

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