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

Allscripts Healthcare Solution, Inc. MDRX is well poised for growth, backed by lucrative deals, innovation and strong prospects in the Sunrise electronic health record (EHR) suite. However, segmental softness remains a concern.

Shares of Allscripts have gained 83.9% compared with the industry’s growth of 24.3% in the past three months.

The company, with a market capitalization of $2.20 billion, provides IT solutions and services to healthcare organizations. It anticipates an earnings improvement of 9.1% over the next five years. Moreover, its bottom line beat estimates in each of the trailing four quarters by 4.9%, on average.

Let’s take a closer look at the factors that substantiate the company’s current Zacks Rank #3 (Hold) status.

Lucrative Deals: Recently, Allscripts announced a collaboration with Microsoft, focusing on implementing an innovative, integrated model for clinical research with an aim to enhance clinical research design, conduct studies more efficiently and improve the research provider and participant experience.

In August 2020, the company forged an alliance with Israel’s Sheba Medical Center to accelerate the pace of AI technologies and boost patient care through the hospitals’ ARC (acronym for accelerate, redesign and collaborate) Innovation Center. This tie-up is likely to fortify Allscripts’ Data, Analytics and Care Coordination segment.

Solid Prospects of Sunrise EHR Platform: We believe that the Sunrise and Paragon EHR platform is a key driver for Allscripts. For investors’ notice, Allscripts Sunrise is a fully integrated EHR platform that connects all clinical and financial aspects of a hospital or health system for inpatient, emergency and outpatient care.

 

During the third quarter of 2020, All Harden Medical Group, a leading family-owned conglomerate in Qatar, and Chicago-based Northwestern Medicine went live with Allscripts Ambulatory Care Services for the grand opening of Allscripts’ Berge Alpart Medical Facility in Qatar. This marked the company’s first Sunrise client in the Middle East. 

Moreover, in the September quarter, the company continued registering strong results from its Veradigm business for solutions targeted at both life science companies and payers. Management is bullish about Allscripts’ opportunities outside the United States and expects to expand internationally. The EHR platform is expected to continue driving growth in the long term.

What’s Impeding the Stock’s Potential?

In the third quarter, Allscripts encountered some headwinds. Bookings came in at $187 million, down 20.8% from the prior-year quarter. With respect to Software delivery, revenues from Support and Maintenance segment also fell 11.9% on a year-over-year basis. Client Services revenues too dipped 5.2% from the prior-year quarter. Further, gross profit in the third quarter was $162 million, down 7.8% from the year-ago period.

Which Way Are Estimates Headed?

For 2020, the Zacks Consensus Estimate for revenues is pegged at $1.63 billion, indicating a decline of 7.9% from the prior-year reported number. The same for earnings stands at 68 cents per share, suggesting a rise of 1.5% fromthe year-ago reported figure.

Key Picks

Some better-ranked stocks from the broader medical space are McKesson Corporation MCK, DaVita Inc DVA and IDEXX Laboratories IDXX. While DaVita currently sports a Zacks Rank#1 (Strong Buy), the other two presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

McKesson has a projected long-term earnings growth rate of 6.6%.

DaVita has a projected long-term earnings growth rate of 18.3%.

IDEXX has an estimated long-term earnings growth rate of 15.8%.

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