Envision Healthcare's Bottom Line Will Grow 18% Next Year, So Buy: Cantor

In a report published Tuesday, Cantor Fitzgerald analyst Joseph D. France maintained a Buy rating on

, while raising the price target from $47 to $54. Analyst Joseph France expects Envision Healthcare's shares to appreciate over the next year, driven by "tremendous momentum" and "great visibility." While the company has kept its 2015 guidance unchanged, Envision Healthcare's margins are expected to expand, boosted by the increasing profitability of the new EmCare contracts in the back half of the year, Evolution gaining traction and acquisitions, "especially the pending Rural/Metro Corporation deal," France said. In the report Cantor Fitzgerald noted, "Despite the loss of Medicaid parity, worth about $14 million in the first half of 2014, EmCare's adjusted EBITDA is up more than 20% through the first six months of 2015, and we expect continued growth, despite lower margins, in the second half of the year." France added that Rural/Metro was a leading national vendor that generated $600 million in annual revenue. Although Rural/Metro's EBITDA margins were currently at merely 10 percent, they could expand significantly "as it is integrated and EVHC upgrades its systems and equipment." The adjusted EPS and adjusted EBITDA for 2016 are at $1.80 and $785 million, respectively, reflecting the preliminary estimate of the Rural/Metro impact. "We expect these trends to focus more attention on EVHC's strong organic growth, which compares favorably with other important staffing names that report 2Q:15 results this week," France said.