On Jul 4, Zacks Investment Research upgraded
) - leading operator of single-specialty practice-based ambulatory
surgery centers (ASCs)- to a Zacks Rank #1 (Strong Buy).
Amid hurdles like uncertain economic conditions and high
unemployment, AmSurg's first-quarter revenues and earnings per
share (EPS) squarely missed the Zacks Consensus Estimate.
Nonetheless, the Sheridan Healthcare acquisition plan, paving its
way into the fast-growing fragmented physician outsourcing market,
is expected to be a material upside.
AmSurg's first-quarter 2014 adjusted EPS of 53 cents increased
1.9% year over year but missed the Zacks Consensus Estimate by 2
cents. The EPS also remained at the low end of the company-provided
guidance range. Likewise, revenues during the quarter scaled up
1.9% year over year to $263.1 million, but lagged the Zacks
Consensus Estimate of $271.0 million.
According to AmSurg, the year-over-year top-line growth was
backed by 2.4% increase in revenues per procedure, mainly
attributable to six centers acquired in 2013. The company is
confident about figures rising further through the remaining fiscal
as Ophthalmology and Gastrointestine (GI) continue to perform
We are also encouraged by the company's recent plan to acquire
Sheridan Healthcare,a prominent multi-specialty outsourced
physician service provider. According to AmSurg, successful
completion of this acquisition will serve as a golden opportunity
to foray into the huge and fast growing physician outsourcing
Furthermore, strong fundamentals and a robust financial profile
will allow the combined company to make strategic investments for
new growth opportunities. This acquisition is expected to be
immediately accretive to AmSurg's adjusted earnings per share,
EBITDA and cash flow, while considerably improving the company's
top- and bottom-line performances.
Post-acquisition, the combined entity with its unique business
model is expected to pose a major challenge in the competitive
niche by covering 38 states and establishing its hold on a total
addressable market as large as $70 billion. It is also expected to
improve AmSurg's response to emerging market trends.
We expect AmSurg to go ahead with its acquisition pipeline,
supported by a strong cash position.
Meanwhile, the Zacks Consensus Estimate for earnings for 2014 is
currently pegged at $2.47 per share, reflecting year-over-year
growth of 10.65%. The expected long-term earnings growth rate for
the stock is 10.9%.
Other Stocks to Consider
Other stocks worth considering in the similar sector are
US Physical Therapy Inc.
). All the three stocks carry a Zacks Rank #2 (Buy).
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