Why Should Investors Add Amedisys (AMED) To Their Portfolio?
Zacks Investment Research | Sep 21, 2017 03:28AM ET
Amedisys, Inc. (NASDAQ:AMED) , a leading home health and hospice services company is on a healthy growth trajectory of late. It has rallied 20.2% year to date, ahead of the S&P 500’s 11.8% gain and the broader industry ’s decline of 4.2%.
The stock has a market cap of $1.8 billion. The company’s long-term expected growth rate is also favorable at 18.2% compared with the 12.3% gain of the broader industry.
With solid growth prospects, this Zacks Rank #2 (Buy) stock is an attractive pick at present.
Let’s find out whether the recent positive trend is a sustainable one.
The company’s estimate revision trend for the current year has been positive. In the past 60 days, five analysts moved upward with no movement in the opposite direction. The magnitude of estimate revision increased around 5.7% to $2.21 per share over the same time frame.
Of late, Amedisys has been riding high on solid potential of new opportunities within its home health and hospice services segments. We are also encouraged by the company’s long-term strategy to evolve from a traditional home health and hospice care company to a focused unit, bringing home a continuum of care to serve patients with better services and diversify sources of payment to become less reliant on Medicare.
The company has been witnessing growth in the personal care segment on the back of synergies from acquisitions. It recently made a slew of strategic acquisitions — the recent one being that of Intercity Home Care in Massachusetts, slated for close on Oct 1.
The home health industry is poised for substantial growth in the long term, driven by the positive demographic trend in the United States. The company is expected to continue to benefit from ageing demographics of the U.S. population and higher acuity patients in a home nursing environment.
Notably, the company is on track to fortify its footprint in the market place. Lately, it announced completion of National Readmission Prevention Collaborative certification program by a clinical programs team, which handles home healthcare programs.
Additionally, the company’s strong cash balance position bolsters our confidence in the stock.
On the flip side, we anticipate synergies from the Tenet Healthcare (NYSE:THC) acquisition to escalate costs and operating expenses, weighing on the company’s margins. Also, an intense competitive landscape and regulatory concerns continue to pose challenges in the home health and hospice industry.
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Other Key Picks
Other top-ranked medical stocks are Edwards Lifesciences Corp. (NYSE:EW) , Chemed Corp. (NYSE:CHE) and IDEXX Laboratories, Inc. (NASDAQ:IDXX) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Chemed and IDEXX carry a Zacks Rank #2. You can see
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.5% over the last six months.
Chemed has an expected earnings growth rate of 13.3% for the current year. The stock has gained 3.4% in the last six months.
IDEXX has a long-term expected earnings growth rate of 19.8%. The stock has gained around 3.7% over the last six months.
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