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Amedisys (AMED) Prospects Impressive Amid Tough Competition

On Jun 5, we issued an updated research report on leading molecular diagnostic company, Amedisys, Inc. AMED. The stock currently has a Zacks Rank #3 (Hold).

For the majority of the last three months, Amedisys has been trading above the Zacks categorized Medical - Outpatient and Home Healthcare industry. As per the latest share price movement, the stock has gained 18.9%, significantly ahead of the broader industry’s gain of 1.4%. The company’s impressive results in first-quarter 2017with both earnings and revenues significantly improving year over year have bolstered market confidence leading to a further rally in share price.

We are encouraged by the company’s long-term strategy to evolve from a traditional home health and hospice care company to one focused on bringing home a continuum of care to better serve patients and diversify sources of payment so as to become less reliant on Medicare.  The company recently made a number of strategic acquisitions – the recent one being that of Tenet Healthcare’s home health and hospice operations in Arizona.

The home health industry is poised for substantial growth in the long term driven by the positive demographic trend in the U.S. The company should continue to benefit from the aging demographics of the U.S. population and the need for higher acuity patients in a home nursing environment. 

We are also optimistic about the recently published in-depth article on hospice benefits in the Wall Street Journal, which focuses on increased Medicare expenditure for home health. The article also emphasized on factors driving growth in longer length of patients’ stay in hospice care. Both these factors reflect greater revenue opportunities for hospice care providers like Amedisys.

On the flip side, Amedisys faces tough competition from local privately and publicly-owned and hospital-owned health care providers. Moreover, the company reported a 38 basis point (bps) contraction in gross margin to 41.8% in the first quarter due to cost escalation.

Key Picks

A few better-ranked medical stocks are Align Technology, Inc. ALGN, Inogen, Inc. INGN and Accelerate Diagnostics, Inc. AXDX. Notably, Align Technologyand Inogen sport a Zacks Rank #1 (Strong Buy), while Accelerate Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technologyhas an expected long-term adjusted earnings growth of almost 22.8%. The stock added roughly 44.3% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 78.3%.

Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock added roughly 13.7% over the last three months.

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Inogen, Inc (INGN): Free Stock Analysis Report
 
Accelerate Diagnostics, Inc. (AXDX): Free Stock Analysis Report
 
Amedisys Inc (AMED): Free Stock Analysis Report
 
Align Technology, Inc. (ALGN): Free Stock Analysis Report
 
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