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Here's Why You Should Retain Change Healthcare (CHNG) Stock
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Change Healthcare Inc. is well poised for growth backed by strategic deals and a robust payment accuracy business. However, stiff competition remains a concern.
The stock has gained 22% compared with the industry’s growth of 1.8% on a year-to-date basis. Also, the S&P 500 Index has rallied 4.6% in the same timeframe.
Change Healthcare — with a market capitalization of $6.97 billion — is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States. It anticipates earnings to improve 2% over the next five years. Moreover, the company has a trailing four-quarter earnings surprise 30.4%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Factor Hurting the Stock
The market for healthcare information technology (HCIT) solutions, devices and services is intensely competitive and rapidly evolving. Consequently, intense competition can put pressure on the company’s pricing and margins.
Key Catalysts
Change Healthcare has been implementing growth initiatives and integrating innovation across its platform.
During the third quarter of fiscal 2021, the company completed the divestiture of its Capacity Management business for $67.5 million. The sale, which is in sync with Change Healthcare’s strategy, will enable the company to focus on the key areas of its business that can deliver the best possible outcomes for customers through the strength of its platform.
Further, during the same quarter, Change Healthcare entered into an agreement with Carnegie Mellon University’s Delphi Research Group for the launch of Delphi's improved COVIDcast real-time COVID-19 indicators. COVIDcast is taking an additional step by adding de-identified COVID-19 claims from Change Healthcare to its unique combination of survey, testing and mobility data.
During second-quarter fiscal 2021, the company acquired Nucleus.io to accelerate its cloud-native enterprise imaging efforts, and PROMETHEUS Analytics to improve its value-based care initiatives. With respect to Nucleus.io, the buyout is likely to extend the company’s market opportunity with individual radiologists and radiology practices.
Additionally, with respect to Payment Accuracy business, the company is committed toward healthcare plans and payers generating double-digit growth for the same. The company’s end-to-end solution helps drive accuracy earlier in the payment cycle, lowering administrative costs and reducing friction.
In the first-quarter fiscal 2021 earnings call, management stated that with respect to Payment Accuracy business, Change Healthcare signed multimillion-dollar deals, expanding relationships with several of the largest managed care companies in the United States.
Estimates Trend
For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $3.09 billion, indicating a decline of 6.6% from the year-ago period. The same for adjusted earnings per share stands at $1.27, suggesting a fall of 18.1% from the prior-year reported figure.
Hologic’s long-term earnings growth rate is estimated at 15.4%.
IDEXX’s long-term earnings growth rate is projected at 15.8%.
Abbott’s long-term earnings growth rate is estimated at 14.1%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Here's Why You Should Retain Change Healthcare (CHNG) Stock
Change Healthcare Inc. is well poised for growth backed by strategic deals and a robust payment accuracy business. However, stiff competition remains a concern.
The stock has gained 22% compared with the industry’s growth of 1.8% on a year-to-date basis. Also, the S&P 500 Index has rallied 4.6% in the same timeframe.
Change Healthcare — with a market capitalization of $6.97 billion — is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States. It anticipates earnings to improve 2% over the next five years. Moreover, the company has a trailing four-quarter earnings surprise 30.4%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Factor Hurting the Stock
The market for healthcare information technology (HCIT) solutions, devices and services is intensely competitive and rapidly evolving. Consequently, intense competition can put pressure on the company’s pricing and margins.
Key Catalysts
Change Healthcare has been implementing growth initiatives and integrating innovation across its platform.
During the third quarter of fiscal 2021, the company completed the divestiture of its Capacity Management business for $67.5 million. The sale, which is in sync with Change Healthcare’s strategy, will enable the company to focus on the key areas of its business that can deliver the best possible outcomes for customers through the strength of its platform.
Further, during the same quarter, Change Healthcare entered into an agreement with Carnegie Mellon University’s Delphi Research Group for the launch of Delphi's improved COVIDcast real-time COVID-19 indicators. COVIDcast is taking an additional step by adding de-identified COVID-19 claims from Change Healthcare to its unique combination of survey, testing and mobility data.
During second-quarter fiscal 2021, the company acquired Nucleus.io to accelerate its cloud-native enterprise imaging efforts, and PROMETHEUS Analytics to improve its value-based care initiatives. With respect to Nucleus.io, the buyout is likely to extend the company’s market opportunity with individual radiologists and radiology practices.
Additionally, with respect to Payment Accuracy business, the company is committed toward healthcare plans and payers generating double-digit growth for the same. The company’s end-to-end solution helps drive accuracy earlier in the payment cycle, lowering administrative costs and reducing friction.
In the first-quarter fiscal 2021 earnings call, management stated that with respect to Payment Accuracy business, Change Healthcare signed multimillion-dollar deals, expanding relationships with several of the largest managed care companies in the United States.
Estimates Trend
For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $3.09 billion, indicating a decline of 6.6% from the year-ago period. The same for adjusted earnings per share stands at $1.27, suggesting a fall of 18.1% from the prior-year reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Abbott Laboratories (ABT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic’s long-term earnings growth rate is estimated at 15.4%.
IDEXX’s long-term earnings growth rate is projected at 15.8%.
Abbott’s long-term earnings growth rate is estimated at 14.1%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>