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Here's Why You Should Retain LHC Group (LHCG) Stock Now
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LHC Group, Inc. is well poised for growth on the back of a broad range of services, and prudent acquisition and joint ventures (JVs). Higher expenses continue to remain a concern.
The stock has gained 50%, compared with the industry’s growth of 33.5% in a year’s time. Further, the S&P 500 Index rallied 18.3% in the same time frame.
The company — with a market capitalization of $6.35 billion — serves as a post-acute care partner for hospitals, physicians and families in the United States. It anticipates earnings to improve 13.1% over the next five years.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
LHC Group’s third-quarter 2020 results were impacted by expenses related to COVID-19 with respect to purchases of personal protective equipment (PPE), additional supplies and employee-related costs and expenses, comprising employee bonuses, higher wages and wage supplements for frontline caregivers and other categories of costs and expenses incurred in response to the pandemic.
Key Catalysts
LHC Group has been offering a wide array of services through its diverse business segments. These, in turn, have been instrumental in driving the top line.
Within home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care. Increased acquisition activities in this space has helped the company gain a competitive edge.
Since the onset of the COVID-19, the company has been sourcing adequate PPE kits for patients and clinicians. These PPE kits include N95 mask, isolation gown, face shield, gloves, head and shoe covering, appropriate facemask, and a pair of gloves.
Additionally, LHC Group has been committed to making buyouts and JVs to drive inorganic expansion. The company’s pipeline of potential M&A growth opportunities remains robust and is well balanced between Home Health and Hospice.
On Aug 1, 2020, LHC Group finalized a JV with Orlando Health to boost home health and home and community based services (HCBS) in the state of Florida. The company anticipates the JV to account for almost $3.5 million in incremental annualized revenues. On Oct 1, 2020, the company finalized a JV with University Health Care System to bolster home health and hospice services in Georgia and South Carolina. The company expects this JV to generate almost $8.3 million in incremental annualized revenues. In the same month, the company finalized a JV with Northeast Georgia Health System in order to share ownership of SunCrest Home Health in Gainesville, GA.
On Nov 1, 2020, LHC Group finalized an expansion of JV with CHRISTUS Health via an agreement of adding a hospice provider in San Marcos, TX. The company anticipates this JV to generate almost $2.1 million in incremental annualized revenues.
Backed by the M&A pipeline and historic organic growth opportunity, the company remains optimistic and bullish on both organic and M&A growth opportunities for the remainder of 2020, 2021 and beyond.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $2.07 billion, indicating a slight decline of 0.7% from the prior-year quarter. The same for adjusted earnings per share stands at $5.01, suggesting growth of 12.1% from the year-ago reported figure.
Merit Medical has a projected long-term earnings growth rate of 12.6%.
Align Technology has an estimated long-term earnings growth rate of 18.3%.
Thermo Fisher has a projected long-term earnings growth rate of 18%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Here's Why You Should Retain LHC Group (LHCG) Stock Now
LHC Group, Inc. is well poised for growth on the back of a broad range of services, and prudent acquisition and joint ventures (JVs). Higher expenses continue to remain a concern.
The stock has gained 50%, compared with the industry’s growth of 33.5% in a year’s time. Further, the S&P 500 Index rallied 18.3% in the same time frame.
The company — with a market capitalization of $6.35 billion — serves as a post-acute care partner for hospitals, physicians and families in the United States. It anticipates earnings to improve 13.1% over the next five years.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
LHC Group’s third-quarter 2020 results were impacted by expenses related to COVID-19 with respect to purchases of personal protective equipment (PPE), additional supplies and employee-related costs and expenses, comprising employee bonuses, higher wages and wage supplements for frontline caregivers and other categories of costs and expenses incurred in response to the pandemic.
Key Catalysts
LHC Group has been offering a wide array of services through its diverse business segments. These, in turn, have been instrumental in driving the top line.
Within home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care. Increased acquisition activities in this space has helped the company gain a competitive edge.
Since the onset of the COVID-19, the company has been sourcing adequate PPE kits for patients and clinicians. These PPE kits include N95 mask, isolation gown, face shield, gloves, head and shoe covering, appropriate facemask, and a pair of gloves.
Additionally, LHC Group has been committed to making buyouts and JVs to drive inorganic expansion. The company’s pipeline of potential M&A growth opportunities remains robust and is well balanced between Home Health and Hospice.
On Aug 1, 2020, LHC Group finalized a JV with Orlando Health to boost home health and home and community based services (HCBS) in the state of Florida. The company anticipates the JV to account for almost $3.5 million in incremental annualized revenues. On Oct 1, 2020, the company finalized a JV with University Health Care System to bolster home health and hospice services in Georgia and South Carolina. The company expects this JV to generate almost $8.3 million in incremental annualized revenues. In the same month, the company finalized a JV with Northeast Georgia Health System in order to share ownership of SunCrest Home Health in Gainesville, GA.
On Nov 1, 2020, LHC Group finalized an expansion of JV with CHRISTUS Health via an agreement of adding a hospice provider in San Marcos, TX. The company anticipates this JV to generate almost $2.1 million in incremental annualized revenues.
Backed by the M&A pipeline and historic organic growth opportunity, the company remains optimistic and bullish on both organic and M&A growth opportunities for the remainder of 2020, 2021 and beyond.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $2.07 billion, indicating a slight decline of 0.7% from the prior-year quarter. The same for adjusted earnings per share stands at $5.01, suggesting growth of 12.1% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Merit Medical Systems, Inc. (MMSI - Free Report) , Align Technology, Inc. (ALGN - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical has a projected long-term earnings growth rate of 12.6%.
Align Technology has an estimated long-term earnings growth rate of 18.3%.
Thermo Fisher has a projected long-term earnings growth rate of 18%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>