NextGen Healthcare, Inc. is well-poised for growth in the coming quarters, courtesy of its solid product portfolio. The optimism led by solid fourth-quarter fiscal 2023 performance and continued demand for its solutions are expected to contribute further. NextGen’s dependence on third-party partners and stiff competition pose threats.

Over the past year, this Zacks Rank #3 (Hold) stock has lost 7.5% compared with a 29.3% decline of the industry. The S&P 500 has witnessed 16.2% growth in the said time frame.

The renowned global provider of innovative and cloud-based healthcare technology solutions has a market capitalization of $1.07 billion. NextGen projects 10.2% growth for fiscal 2024 and expects to maintain a strong performance. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 3.5%.

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Let’s delve deeper.

Solid Product Portfolio: We are optimistic about NextGen’s innovative cloud-based healthcare technology solutions that empower healthcare practices. Its portfolio includes tightly integrated solutions that deliver on ambulatory healthcare imperatives, including consumerism, digitization, risk allocation, regulatory influence and integrated care and health equity.

In March, NextGen announced the launch of Mirth Cloud Connect, a cloud-based solution that provides interoperability as a managed solution.

Solid Demand for NextGen Solutions: We are optimistic about NextGen’s continued benefit from strong demand for its NextGen solutions that include Hospitals, electronic health record (EHR) and practice management (PM). NextGen’s Inpatient Clinicals, Lab and Patient Portal EHR solutions have also been gaining considerable traction.

In June, NextGen announced that Haymarket Center had chosen NextGen Enterprise EHR and NextGen PM to deliver 24/7 whole-person care in Illinois.

Strong Q4 Results: NextGen’s solid fourth-quarter fiscal 2023 results buoy optimism. The company saw a solid uptick in the top line and strength in both Recurring and Non-recurring revenues. Robust increases in Subscription services, Managed services and Transactional and data services revenues were also registered. The continued integration of TSI Healthcare also looks promising for the stock.

Downsides

Dependence on Third-Party Partners: NextGen is subject to several risks associated with having a portion of its assets and operations located in India and using third-party service providers in India and other countries. Various factors, such as changes in the current Government of India, could trigger significant changes in India’s economic liberalization and deregulation policies and disrupt business and economic conditions in India generally and NextGen’s business in particular.

Stiff Competition: The markets for healthcare information systems are intensely competitive, and NextGen faces significant competition from various sources. Several of its competitors have substantially greater resources, while some of the larger competitors have greater scale than NextGen. Transaction-induced pressures or other related factors may result in price erosion or other negative market dynamics that could adversely affect NextGen’s business.

Estimate Trend

NextGen is witnessing a negative estimate revision trend for fiscal 2024. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.9% south to $1.08.

The Zacks Consensus Estimate for the company’s first-quarter fiscal 2024 revenues is pegged at $173.1 million, suggesting a 12.9% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX Quick QuoteHOLX - Free Report) , HealthEquity, Inc. (HQY Quick QuoteHQY - Free Report) and Boston Scientific Corporation (BSX Quick QuoteBSX - Free Report) .

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic has gained 13.8% compared with the industry’s 10.6% rise in the past year.

HealthEquity, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.

HealthEquity has gained 6.1% against the industry’s 14.7% decline over the past year.

Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.

Boston Scientific has gained 41.8% against the industry’s 22.6% decline over the past year.