On May 27, 2013, we reiterated our Neutral recommendation on
Quality Systems Inc.
) based on its fiscal fourth quarter 2013 (ending Mar 31)
Why the Retention?
On May 23, Quality Systems announced its results for the
reported quarter. The company reported adjusted earnings per
share of 21 cents. It missed the Zacks Consensus Estimate of 28
cents. Adjusted earnings exclude an impairment burden of $17.4
million on goodwill of Hospital Division.
Revenue rose 2% year over year to $111.3 million in the fiscal
fourth quarter. The company's revenues missed the Zacks Consensus
Estimate of $118 million.
The pipeline improved slightly to $142 million from $139
million in the sequentially prior quarter. However, margins were
negatively impacted by a drop in higher margin software sales.
The company has not issued guidance for the current fiscal
The Zacks Consensus Estimate for fiscal 2014 has declined by a
penny (down 0.8%) to $1.18 over the past week. The Zacks
Consensus Estimate for fiscal 2015 has dropped by 2 cents (down
1.5%) to $1.29 during the same timeframe.
Competition is intense from well regarded players such as
) and others. Price discounting is frequent, particularly at the
lower end, and Software as a Service (SaaS) based model appears
to have exacerbated pricing pressure. While fresh projects have
shrunk in number, the replacement market is growing.
Currently, the stock retains a Zacks Rank #4 (Sell). However,
we are more positive about other stocks such as
Merge Healthcare Incorporated
) which carries a Zacks Rank #2 (Buy) and is expected to do
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QUALITY SYS (QSII): Free Stock Analysis
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