4 Reasons To Like AMN Healthcare

AMN Healthcare Services, Inc. AMN, a staffing company for health care firms, has managed to secure the top-notch rating from KeyBanc Capital Markets, with the positive sentiment premised on four factors.

The Analyst

KeyBanc analyst Jason Gurda initiated coverage of AMN Healthcare Services with an Overweight rating and $50 price target.

The Thesis

AMN Healthcare, with an 11 percent market share, has shown consistent execution and strong growth, Gurda said in a note. The company is poised to report earnings per share growth of 36 percent on a CAGR basis over the four-year period between 2014 and 2017, Gurda added.

Gurda said he is positive on AMN Healthcare shares due to the following four reasons:

1. The company is on track to generate 8-12 percent earnings per share growth over the next three to five years.
2. Continued market share gains and the retirement of baby boomer clinicians will offset tepid hospital volume growth, by way of opening up new job opportunities.
3. Low debt level and diversified portfolio could shield the company from a potential downturn.
4. The company's valuation is reasonable.

KeyBanc believes slowing growth in 2017 is due to softer hospital demand and the recognition of $45 million of high-margin, non-recurring labor disruption revenue in 2016.

Excluding the labor disruption revenues, the firm estimates 2017 earnings per share growth of 10 percent year-over-year, instead of 4 percent.

"Separately AMN continues to focus on improving margins by expanding high-margin services and through targeted SG&A savings, and the Company is targeting an EBITDA margin of 14% by 2020," KeyBanc said.

The Price Target

AMN Healthcare shares have risen 13.52 percent in the year-to-date period, having gained a steeper 35.14 percent over the past year.

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