Rating Justification
The lead analyst believes the company's core fundamentals were showing improvements, pointing out the number one ranking of Touchworks and Sunrise in Black Book for the current year. Significantly, Sunrise platform enjoyed the ranking among the big hospitals for three straight years. The ranking was accorded in "strategic alignment, innovation, client relationships and customization."
Leerink's channel checks also provided a favorable view. Bookings have witnessed consistent year-over-year growth in the six past quarters.
The brokerage said, "We expect adjusted EPS to grow by over 20 percent y/y in 2016E and 2017E, and we believe that MDRX is becoming a more attractive acquisition candidate. In our view the recent deal with Optum shows that the quality of the product and longer-term vision of MDRX have improved substantially over the past few years. Upgrade to Outperform, PT to $17 (from $16)."
Larsen pointed out that the bookings have exceeded consensus in five out of the last six quarters, attributed to improvement in software quality and service in the last three-year period.
The analyst believes shares also provided an attractive acquisition candidate for investors compared to 2012. He believes the stock is underpriced given turnaround events.
At time of writing, Allscripts was trading at $13.12, up 3.47 percent on the day.
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