This new recommendation is a company that helps others cope with the complexity of the healthcare system, explains Gregory Dorsey in The Complete Investor.
Shares of electronics health records company Allscripts Healthcare Solutions (MDRX) have rocketed higher since we added the stock a little over a year ago.
The company’s systems, which bring together data from many sources, help doctors and health care organizations improve care and run more efficiently, and they’re gaining new customers at a brisk clip.
Allscripts’ web-based systems are now found in approximately one-third of US physician groups, half the nation’s hospitals, and 13,000 post-acute facilities, numbers that should increase as the company’s products replace legacy systems.
It has customers in ten other countries as well. Users license the software and rely on the company for support, a source of steady recurring income. Allscripts also has a budding business in IT outsourcing.
After a difficult 2012, and slow start in 2013, the company has been hitting its stride. Recently, it forecast revenue growth of 5 to 8% per year through 2016, better than the 5% that analysts had projected for 2014.
Wall Street anticipates low-teens profit growth over the next several years. But given the pressing need for Allscripts’ products, and the resounding plaudits from users, that’s likely to prove low.
We think Allscripts will earn close to 50 cents a share in 2014 and nearly $1 by 2016, making the stock still exceedingly cheap.
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