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Here's Why You Should Retain Allscripts (MDRX) Stock For Now

Zacks Equity Research
·4-min read

Allscripts Healthcare Solutions, Inc. MDRX is well-poised for growth in the coming quarters, backed by its strategic alliances over the past few months. A robust second-quarter 2021 performance, along with various innovation milestones, is expected to contribute further. However, healthcare regulatory changes and foreign exchange concerns persist.

Over the past year, this Zacks Rank #3 (Hold) stock has surged 35.3% against 29.2% fall of the industry it belongs to. The S&P 500 composite rose 31.7% in the said time frame.

The renowned IT solutions and services provider has a market capitalization of $1.78 billion. The company projects 9.7% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 24.35% for the past four quarters, on average.

Zacks Investment Research
Zacks Investment Research

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Let’s delve deeper.

Strategic Alliances: We are optimistic about Allscripts’ partnerships over the past few months. This month, the company’s business unit, Veradigm, entered into a collaboration with CareMetx. Per the terms of the new agreement, CareMetx is expected to combine its solutions and services directly into the Veradigm AccelRx specialty medication platform.

In September, Allscripts partnered with Eastern Health to advance health-care services and programs while maximizing health system efficiencies and general economic development in Newfoundland and Labrador, Canada.

Innovation: Allscripts’ portfolio consists of various innovation milestones achieved over the past few months, which raise our optimism. The company, this month, announced the launch of Guided Scheduling, the latest addition to its automation features in Allscripts Practice Management. Allscripts Guided Scheduling, launching in Allscripts Practice Management, is an artificial intelligence scheduling application that utilizes real-time provider, practice and industry data to improve providers’ days.

Allscripts confirmed the launch of an internal DEI website giving associates visibility to the DE&I initiatives as well as to the company’s goals and vision during the second-quarter 2021 earnings call in August.

Strong Q2 Results: Allscripts’ solid second-quarter 2021 earnings buoy our optimism. The company saw year-over-year uptick in both the top and bottom lines, along with a surge in total bookings during the reported quarter, which is also impressive. Revenues from the Client services segment also rose during the quarter. Management is upbeat about its strong domestic and global pipeline for health systems, which further buoys our optimism on the stock. Expansion of both margins is another positive.

Downsides

Healthcare Regulatory Changes: Allscripts may be subject to pricing pressures with respect to future sales arising from various sources, including practices of managed care organizations, group purchasing arrangements made through government programs, government action affecting reimbursement levels or any combination thereof under Medicare, Medicaid and other government health programs. The company’s clients and the other entities with which it has business terms are affected by such changes.

Foreign Exchange Concerns: Allscripts conducts its business in currencies other than the U.S. dollar, but reports its financial results in U.S. dollars. As a result, the company gets exposed to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may make Allscripts’ products and services more expensive for its global clients. Further, such fluctuations could materially and adversely impact Allscripts’ operating results.

Estimate Trend

Allscripts is witnessing a positive estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 6.7% north to 80 cents.

The Zacks Consensus Estimate for the company’s third-quarter 2021 revenues is pegged at $376.4 million, suggesting a 6.4% fall from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. HSIC, Intuitive Surgical, Inc. ISRG and West Pharmaceutical Services, Inc. WST.

Henry Schein’s long-term earnings growth rate is estimated at 13.9%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical’s long-term earnings growth rate is estimated at 9.5%. It currently holds a Zacks Rank #2.

West Pharmaceutical’s long-term earnings growth rate is estimated at 27.3%. It currently carries a Zacks Rank #2.


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Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report

Allscripts Healthcare Solutions, Inc. (MDRX) : Free Stock Analysis Report

Henry Schein, Inc. (HSIC) : Free Stock Analysis Report

West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report

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Zacks Investment Research