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Here's Why You Should Hold Allscripts Stock in Your Portfolio
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Allscripts Healthcare Solutions Inc. (MDRX - Free Report) is gaining prominence in the MedTech space, courtesy of its flagship platform — the Sunrise EHR solutions. The company currently has a market capitalization of approximately $1.70 billion.
However, cutthroat competition in the MedTech space, declining bookings and surging expenses have been major dampeners. In a year’s time, this Zacks Rank #3 (Hold) stock has declined 30.5%, significantly wider than the industry’s decline of 8.9%.
Here we take a quick look at Allscripts’ major headwinds and discuss the factors that ensure near-term recovery.
What’s Deterring the Stock?
Allscripts saw a 20.4% increase in operating expenses on a year-over-year basis in the third quarter of 2018. Selling, general and administrative expenses in the quarter totaled $133.2 million, up 13.5% year over year. Research and development expenses totaled $69.7 million, up 36.4% year over year. Per management, this increase is primarily due to the acquisition of the EIS business of Mckesson and the takeover of Practice Fusion.
Bookings in the third quarter came in at $246 million, significantly down from the prior-year quarter’s $304 million. In fact, management expects some volatility in bookings in the quarters ahead.
Why Should You Hold the Stock?
For investors’ notice, 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.
In the third quarter of 2018, Allscripts witnessed contract gains across both the Sunrise and Paragon customers. For example, the company signed a seven-year extension for Sunrise Clinicals, including the addition of Sunrise Registration and Scheduling modules at the Hospital for Special Care in New Britain, Connecticut.
Allscripts also signed a five-year managed services expansion agreement with South Nassau Communities Hospital on Long Island, New York.
Allscripts expects 2018 revenues at the low end of $2.15 billion to $2.25 billion, up 17-22% year over year. Adjusted earnings per share (EPS) are expected at the low end of 72 cents to 82 cents, reflecting an increase of 16% to 32% year over year. Adjusted EBITDA is anticipated between $420 million and $460 million, up 12% to 23% year over year.
Which Way Are Estimates Headed?
The Zacks Consensus Estimate for current-quarter earnings is pegged at 21 cents per share, up 16.7% year over year. The consensus mark for the revenues stands at $565.9 million, reflecting 3.5% increase year over year.
For 2018, the Zacks Consensus Estimate for revenues is pegged at $2.15 billion, up 16.8% year over year. For adjusted earnings, the same is pinned at 73 cents per share, up 17.7%.
Allscripts Healthcare Solutions, Inc. Price and Consensus
A few better-ranked stocks in the broader medical space are Quidel Corporation (QDEL - Free Report) , STAAR Surgical Company (STAA - Free Report) and Illumina, Inc (ILMN - Free Report) .
With a Zacks Rank #1, STAAR Surgical delivered average four-quarter positive earnings surprise of 400%.
Illumina’s long-term earnings growth rate is projected at 23.4%. The stock carries a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Here's Why You Should Hold Allscripts Stock in Your Portfolio
Allscripts Healthcare Solutions Inc. (MDRX - Free Report) is gaining prominence in the MedTech space, courtesy of its flagship platform — the Sunrise EHR solutions. The company currently has a market capitalization of approximately $1.70 billion.
However, cutthroat competition in the MedTech space, declining bookings and surging expenses have been major dampeners. In a year’s time, this Zacks Rank #3 (Hold) stock has declined 30.5%, significantly wider than the industry’s decline of 8.9%.
Here we take a quick look at Allscripts’ major headwinds and discuss the factors that ensure near-term recovery.
What’s Deterring the Stock?
Allscripts saw a 20.4% increase in operating expenses on a year-over-year basis in the third quarter of 2018. Selling, general and administrative expenses in the quarter totaled $133.2 million, up 13.5% year over year. Research and development expenses totaled $69.7 million, up 36.4% year over year. Per management, this increase is primarily due to the acquisition of the EIS business of Mckesson and the takeover of Practice Fusion.
Bookings in the third quarter came in at $246 million, significantly down from the prior-year quarter’s $304 million. In fact, management expects some volatility in bookings in the quarters ahead.
Why Should You Hold the Stock?
For investors’ notice, 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.
In the third quarter of 2018, Allscripts witnessed contract gains across both the Sunrise and Paragon customers. For example, the company signed a seven-year extension for Sunrise Clinicals, including the addition of Sunrise Registration and Scheduling modules at the Hospital for Special Care in New Britain, Connecticut.
Allscripts also signed a five-year managed services expansion agreement with South Nassau Communities Hospital on Long Island, New York.
Allscripts expects 2018 revenues at the low end of $2.15 billion to $2.25 billion, up 17-22% year over year. Adjusted earnings per share (EPS) are expected at the low end of 72 cents to 82 cents, reflecting an increase of 16% to 32% year over year. Adjusted EBITDA is anticipated between $420 million and $460 million, up 12% to 23% year over year.
Which Way Are Estimates Headed?
The Zacks Consensus Estimate for current-quarter earnings is pegged at 21 cents per share, up 16.7% year over year. The consensus mark for the revenues stands at $565.9 million, reflecting 3.5% increase year over year.
For 2018, the Zacks Consensus Estimate for revenues is pegged at $2.15 billion, up 16.8% year over year. For adjusted earnings, the same is pinned at 73 cents per share, up 17.7%.
Allscripts Healthcare Solutions, Inc. Price and Consensus
Allscripts Healthcare Solutions, Inc. Price and Consensus | Allscripts Healthcare Solutions, Inc. Quote
Stocks to Consider
A few better-ranked stocks in the broader medical space are Quidel Corporation (QDEL - Free Report) , STAAR Surgical Company (STAA - Free Report) and Illumina, Inc (ILMN - Free Report) .
Quidel has long-term expected earnings growth rate of 25% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
With a Zacks Rank #1, STAAR Surgical delivered average four-quarter positive earnings surprise of 400%.
Illumina’s long-term earnings growth rate is projected at 23.4%. The stock carries a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>