Allscripts Has 20% Upside: Deutsche Bank Upgrades Stock To Buy

Allscripts Healthcare Solutions Inc MDRX announced its targets for 2018–2020, with revenue growth guided to 6–8 percent and EPS growth of 12–15 percent. Both targets were ahead of the estimates but mostly in line with the consensus.

Deutsche Bank’s George Hill upgraded the rating on the company from Hold to Buy, while raising the price target from $12.50 to $14.00.

Growth Expectations

“Allscripts is beginning to show better results as non-recurring revenue has stabilized, recurring revenue grows faster, and the mix continues to shift to recurring revenue, with non EMR (electronic medical record) solutions seeing faster growth,” the analyst mentioned.

“The investor day highlighted solutions outside of the core EHR (electronic health record) market, with solutions that are EHR agnostic and can be sold to both the Allscripts EHR base and to clients that are using EHR solutions from competitors,” the analyst went on to say.

Management expects cross-sell opportunity of $5 for every new dollar in footprint sales, Hill noted.

The EHR agnostic solutions are likely to drive revenue growth, given that the core EHR business is mostly a replacement market at present, with limited new client opportunities.

Upside Potential

Hill believes if the company is able to meet its 2018–2020 targets, there could be potential for 20 percent return on the shares from their current levels in 2017.

In fact, the analyst expects Allscripts Healthcare to “generate revenue and earnings growth at above market rates, warranting an above market multiple.”

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