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Here's Why You Should Retain Change Healthcare (CHNG) Stock

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Change Healthcare Inc. (CHNG - Free Report) is well-poised for growth backed by strength in artificial intelligence (AI) and machine learning (ML) initiatives and strategic deals. However, stiff competition remains a concern.

Shares of the Zacks Rank #3 (Hold) company have gained 8.6% against the industry’s decline of 30.7% on a year-to-date basis. Meanwhile, the S&P 500 Index has fallen 18.6%.

Change Healthcare — with a market capitalization of $7.24 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 8% over the next five years. The company beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 1.4%.

Key Catalysts

Change Healthcare has been utilizing AI and ML to detect inefficiencies and eliminate them from administrative processes in the healthcare system, consequently lowering costs and helping payers, providers and patients with improved outcomes.

Per the fiscal third-quarter 2022 earnings press release, Change Healthcare extended Stratus Imaging PACS, which is a cloud-native, zero-footprint Picture Archiving and Communication System, to clinical use. This scalable, cloud-native platform is currently being utilized by StatRad — an award-winning teleradiology service whose 90 radiologists read approximately 1.5 million studies a year and cater to hundreds of hospitals throughout the United States.

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Change Healthcare has been implementing growth initiatives and integrating innovation across its platform.

During the fiscal third quarter of 2022, the company made an announcement of a first-of-its-kind collaboration with Zasti to aid healthcare providers in accurate measurement and monitoring of greenhouse gas emissions based on actual care activity. In the quarter under review, the company launched The ASAM Criteria Powered by InterQual, which is a SaaS solution developed through an exclusive partnership with the American Society of Addiction Medicine (ASAM). This software facilitates seamless integration into existing care-management workflows, thereby substantially lowering the time needed for substance use disorder (SUD) patient assessments, enhancing consistency, and simplifying the prior-authorization process utilizing industry-standard criteria.

Factor Hurting the Stock

The healthcare information technology (HCIT) solutions, devices, and services market is extremely competitive and rapidly evolving. Consequently, intense competition can weigh on the company’s pricing and margins.

Estimates Trend

The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $3.46 billion, suggesting growth of 12.1% from the year-ago reported number. The same for earnings stands at $1.56 per share, indicating an improvement of 16.4% from the prior-year quarter.

Stocks to Consider

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Masimo Corporation (MASI - Free Report) and Veeva Systems, Inc. (VEEV - Free Report) .

AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 15.6%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 1.1%. The company’s earnings yield of 11.4% compares favorably with the industry’s (0.8%).

Masimo beat earnings estimates in each of the trailing four quarters, the average surprise being 4.4%. The company currently carries a Zacks Rank #2 (Buy).

Masimo’s estimated earnings growth rate for second-quarter 2022 is pegged at 22.3%. The company’s earnings yield is pegged at 3.8% against the industry’s (8.5%).

Veeva Systems surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.6%. The company currently carries a Zacks Rank #2.

Veeva Systems’ long-term earnings growth rate is estimated at 18.1%. The company’s earnings yield of 2.4% compares favorably with the industry’s 0.2%.