UPDATE: J.P. Morgan Upgrades Quality Systems to Neutral, Raises PT Following Clinton Group Agreement Announcement

In a report published Thursday, J.P. Morgan analyst Lisa C. Gill upgraded the rating on Quality Systems QSII from Underweight to Neutral, and raised the price target from $17.00 to $20.00. In the report, J.P. Morgan noted, “Last evening, Quality Systems announced that it had reached an agreement with the Clinton Group; an activist investor that recently proposed a new slate of directors. Under the agreement QSII agreed to propose three of the Clinton Group's nominees at its August 15 shareholder's meeting and to appoint two of those directors to the five-person 'Transaction Committee' with the intent to explore strategic options for the company. Our investment thesis for QSII has in part been driven by our concern regarding Quality Systems' Board and management; therefore we view the potential changes positively, although we remain cautious about a possible transaction given QSII's recent results and the recent failure of other transactions in the HIT space. At this point, we move to a Neutral rating from Underweight given these developments, although we still remain cautious on Quality Systems' underlying business prospects.” Quality Systems closed on Wednesday at $21.84.