Quality Systems Faces A Ton Of Challenges

Avondale Partners maintains its Market Perform rating and $14 price target on Quality Systems, Inc. QSII, saying the company faces many challenges despite commencing turnaround efforts.

"We remain neutral on QSII's ability to elevate HealthFusion above the price war at the bottom of the market," analyst Greg Bolan wrote in a note.

Bolan noted that Quality Systems faces strong competition in the fragmented small physician practice market despite having robust opportunity.

The analyst highlighted that some competition from Quality Systems' larger peers in tangential services for hospitals are expecting strengths unlikely to be seen by Quality Systems. Because of Quality Systems' focus on physician markets, those areas of strength are not applicable to the company.

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However, the analyst believes the shift to value-based reimbursement should help products such as HealthFusion due to its comprehensive reporting/quality platform, "helping physicians with reimbursement as opposed to a static EHR."

"Mgmt.'s business plan to anchor and begin growing the business again sounds promising, but we maintain our neutral stance on the shares until visible progress is present," Bolan added.

Shares of Quality Systems closed Friday's regular trading session at $13.29, and the stock was down 1.96 percent at $13.03 shortly after Monday's opening bell.