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Here's Why You Should Retain Allscripts (MDRX) Stock for Now

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Allscripts Healthcare Solution, Inc. (MDRX - Free Report) is well poised for growth, backed by lucrative deals, innovation and strong prospects in the Sunrise electronic health record (EHR) platform. However, segmental softness remains a concern.

Shares of Allscripts have gained 10% against the industry’s decline of 3.8% in the past three months.

The company, with a market capitalization of $2.19 billion, provides IT solutions and services to healthcare organizations. It anticipates an earnings improvement of 6.9% over the next five years. Moreover, its bottom line beat estimates in each of the trailing four quarters by 14.3%, on average.

Let’s take a closer look at the factors that substantiate the company’s current Zacks Rank #3 (Hold) status.

Lucrative Deals: Recently, Allscripts announced a collaboration with Microsoft with focus on implementing an innovative, integrated model for clinical research, aimed at enhance clinical research design, conduct studies more efficiently and improve the research provider and participant’s experience.

In November 2020, the company’s business unit Veradigm, a leader of real-world data and analytic solutions, and HealthVerity, recently inked a partnership that builds on both entities’ existing relationship. The latter is a pioneer in privacy-protected data exchange.

The initial focus of the deal is the development of innovative Health Insurance Portability and Accountability compliant data products created by linking real-world data from a variety of leading sources.This deal should boost Allscripts’ Clinical and Financial Solutions segment.

Solid Prospects in Sunrise EHR Platform: We believe that the Sunrise and Paragon EHR platform is a key growth driver for Allscripts. For investors’ notice, Allscripts 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 fourth quarter of 2020, the company announced the general availability of Sunrise 20.0, which is a milestone release. The enhanced version of Sunrise will streamline workflows, curb inefficiencies and on the whole, reduce the burden on clinicians.

In October 2020, the company completed the rollout of Sunrise EHR platform at the Latrobe Regional Hospital. This was one of the first EHRs in Australia to use Microsoft Azure. The efficacy, flexibility and resilience related to a cloud-based system influenced the company’s decision to extend the Sunrise EHR platform across Gippsland to four additional hospitals.

This platform is expected to continue driving growth in the long term.

What’s Deterring the Stock?

In the December quarter, Allscripts encountered some headwinds. For the same period 2020, bookings came in at $220 million, down 29.5% from the prior-year quarter.With respect to Software delivery, Support and Maintenance segment’s revenues fell 3% on a year-over-year basis. Same for Client Services wherein revenues saw a decline of 12.3% from the prior-year quarter. Gross profit in the fourth quarter was down 0.4% from the year-ago quarter.

Which Way Are Estimates Headed?

For 2021, the Zacks Consensus Estimate for revenues is pegged at $1.50 billion, indicating a decline of 8.5% from the prior-year period. The same for earnings stands at 68 cents per share, suggesting a decrease of 10.5% from the year-ago reported figure.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Align Technology (ALGN - Free Report) , Abbott Laboratories (ABT - Free Report) and Hologic (HOLX - Free Report) . While Align Technology currently sports a Zacks Rank #1 (Strong Buy), the other two presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology has a projected long-term earnings growth rate of 19%.

Abbott has a projected long-term earnings growth rate of 14.1%.

Hologic has an estimated long-term earnings growth rate of 15.4%.

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