Bank of America Merrill Lynch Reiterates Buy On HMS Holdings

Bank of America Merrill Lynch is out with a research report on HMS Holdings Corp. HMSY and it has a Buy rating and a $87 price target on shares. In a note to clients, Bank of America Merrill Lynch writes, "HMSY's 2Q11 GAAP EPS beat our $0.40 estimate on stronger revenues that drove operating margin expansion on a relatively fixed cost base. Specifically, total revenues of $89.3 million exceeded our $87.3 million estimate on 22% organic growth, ahead of management's 20% target. HMSY affirmed its 20% annual organic growth goal beyond 2011, which we expect should alleviate concerns of a slowdown due to Medicaid budget pressures, and raised full year EPS guidance to $1.78 (from $1.74). We think better top line trends bode well for future results since most revenues are recurring, and we are raising our 2011 and 2012 EPS projections to $1.80 (from $1.78) and $2.23 (from $2.22) accordingly." Shares of HMSY gained 95 cents on Friday to close at $75.60.