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AmSurg Corp. (AMSG)

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AmSurg Corp.'s (AMSG) second quarter EPS of $0.38 met the Zacks Consensus Estimate and the year-ago EPS. Economic uncertainty has been impacting AmSurg potential customers deferring elective procedures, but its top line improved due to growth in total procedures with the opening of new centers.

Moreover, with a relatively solid development and acquisition pipeline in place, supported by a strong cash position, AmSurg is well poised to carry out suitable acquisitions. Government has been undertaking initiatives to curtail healthcare expenditures thereby resulting in a shift toward ASCs from hospitals.

Given the long-term prospects of AmSurg, we upgrade the stock to Outperform. Over the last five years, AmSurg's shares have traded in a range of 9.7X to 19.3X trailing 12-month earnings. Our target price of $25 per share is based on 14.8X our 2011 EPS estimate of $1.69.

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