On May 13, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).
Why the Downgrade?
MedAssets has been witnessing a negative trend in earnings estimate
revision over the past one month. For 2014, three estimates moved
down in the past 30 days, with no upward revision causing the Zacks
Consensus Estimate to shrink 1.6% to $1.20 per share. Moreover,
long-term expected earnings growth for MedAssets is pegged lower at
13.0% compared with industry growth of 18.4%.
On April 30, 2014, MedAssets reported its 2014-first-quarter
results, which lagged estimates at both fronts. Following the
earnings release, shares of MedAssets have dropped 1.2% till the
last closing date.
In the first quarter, adjusted earnings per share of 27 cents
reflected a year-over-year drop of 28.9% and lagged the Zacks
Consensus Estimate by 2 cents. Total revenues in the quarter also
slipped 1.1% to $170.9 million and fell short of the Zacks
Consensus Estimate of $172 million.
Revenues from both segments - Spend and Clinical Resource
Management (SCM) and Revenue Cycle Management (RCM) - declined
during the quarter on the back of lower group purchasing net
administrative fees and fall in performance-related fees along with
the loss of two clients in early 2013.
MedAssets also reported lower adjusted EBITDA for the first
quarter, principally due to the year-over-year decline in
performance-related fees. Moreover, adjusted EBITDA margin
contracted during the quarter due to higher margin contribution
from certain revenues last year.
Nevertheless, MedAssets maintained its 2014 financial guidance. The
company expects adjusted earnings per share in the band of
$1.12−$1.22. The current Zacks Consensus Estimate of $1.20 lies
within the guidance range.
Total net revenue for 2014 is anticipated in the range of $700 to
$714 million. The current Zacks Consensus Estimate of $718 million
lies above the company's guidance range.
The evolving healthcare environment marked with significant changes
in patient demographics and reimbursement is expected to pose
several operational and strategic challenges for healthcare
organizations like MedAssets, going forward.
Other Stocks to Consider
Some better-ranked medical services stocks include
ICON Public Limited Company
BG Medicine, Inc.
). While ICON sports a Zacks Rank #1 (Strong Buy), BG Medicine and
Omnicare retain a Zacks Rank #2 (Buy).
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BG MEDICINE INC (BGMD): Free Stock Analysis
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MEDASSETS INC (MDAS): Free Stock Analysis
OMNICARE INC (OCR): Free Stock Analysis Report
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