Allscripts Healthcare (MDRX) Driven by Bookings Growth - Analyst Blog

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On Aug 11, we have updated our research report on Allscripts Healthcare Solutions, Inc. ( MDRX ). We are confident about the stock given its strong bookings growth, reflecting client confidence in new offerings by MDRX.

Bookings improved 9.3% to $234.0 million in the second quarter of 2014 from $214.0 million in the prior-year quarter. The increase was driven by higher client demand for new and enhanced solution functionality across the entire MDRX product portfolio by healthcare systems, hospitals and ambulatory markets. The impressive bookings performance in the second quarter reflects strong Allscripts Sunrise EHR platform sales to new domestic and international clients.

Further, MDRX is working aggressively to deliver the Meaningful Use 2 and ICD-10 upgrades to its clients. The company's all five flagship products viz. Sunrise Clinical Manager 6.0, Sunrise Financial Manager, Allscripts Data Exchange 1.5, Enterprise EHR 11.4, and Professional EHR 12.0 were made generally available.

However, global economic weakness presents a substantial risk for MDRX. Unlike the manufacturers of life-saving devices, the demand for the software company's products is closely tied to budgetary processes of clients.

Moreover, MDRX's products have a long sales cycle which involves decision-making at different managerial levels. This increases the company's operating expenses and might result in cancellation of orders.

On the other hand, companies such as Cerner Corp. ( CERN ) and privately-held Epic compete against MDRX with a far simpler rationale for their products. Among them, Cerner have long ago developed unified and seamless products serving both inpatient and outpatient segments.

Currently, MDRX carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical information systems industry include Merge Healthcare Inc. ( MRGE ) and Omnicell, Inc. ( OMCL ). Both carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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