Underperform Rating For Allscripts-Misys Healthcare Solutions (MDRX), athenahealth, Inc. (ATHN) And Cerner Corporation (CERN)
Bank of America believes that Allscripts-Misys Healthcare Solutions faces challenges on the grounds of lower physician reimbursements, patient volumes and operational execution in implementing larger contracts. A price target of $18 is maintained for MDRX, based on valuation metric of 26.1x forward earnings and 14.5x adjusted EBITDA.
The firm believes that athenahealth, Inc has a small but growing footprint of roughly 15,000 athenaCollector physician subscribers. The firm expects 40 percent projected EPS and EBITDA growth over the next few years, driven by new physicians and medical providers joining its service network, and growth through acquisitions. The firm believes that ATHN is a rapidly growing IT company with very aggressive plans to expand, the main challenge faced by athenahealth being if it will be able to manage day-to-day operations and retaining top talent. A price target of $40 was maintained based on the metric of 47.1x forward earnings and 24x adjusted EBITDA.
The firm maintains a conservative view for Cerner Corporation for a few reasons, like CERN’s exposure to hospital spending pattern which suggests a temporary pause in the technology investments, top line growth that is expected to moderate out and yield roughly 20 percent EPS growth in the near future and that there could be an adverse impact from increased sales mix of subscription offering. A price target of $85 was maintained based on the metric of 23.9x forward earnings and 10.9x adjusted EBITDA. The firm maintained an Underperform rating for all the three companies.
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