AMN Healthcare Services, Inc. AMN won thanks to its wide range of services. A strong performance in the first quarter of 2022 and its major buybacks are also raising optimism about the stock. However, fierce competition and consolidation of healthcare delivery units are major drawbacks.
Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 6.7% against a 63.6% drop in the industry and a 4.4% drop in the S&P 500.
The renowned player in the field of total healthcare talent services has a market capitalization of $4.25 billion. The company forecasts growth of 1.1% for the next five years and expects to see continued improvements in its business.
AMN Healthcare has outperformed the Zacks consensus estimate for the past four quarters, generating a surprise profit of 15.6% on average.
Image source: Zacks Investment Research
Let’s go deeper.
Good results in the first quarter: AMN Healthcare’s better-than-expected results in the first quarter of 2022 reinforce our optimism. The company delivered strong performance in each of its major segments, as well as an increase in revenue and earnings during the quarter. According to management, a tight labor market has created record demand in many areas of the company’s business, which is encouraging. The expansion of adjusted operating margin also bodes well for the stock.
Purchases: AMN Healthcare has recently bolstered its inorganic portfolio through a series of acquisitions, which adds to our optimism. This month, the company acquired Connetics USA. The acquisition is expected to expand AMN Healthcare’s international recruitment activity and should allow AMN Healthcare to add more qualified professionals to its international network of nurses and allied professionals.
The takeovers of Synzi, Stratus Video (now known as AMN Language Services) and b4health are other notable AMN Healthcare acquisitions.
Wide range of services: We are optimistic about the gradual evolution of its activities beyond the traditional health workforce. The company has become a strategic partner of total talent management solutions for its customers. AMN Healthcare has expanded its portfolio to meet a diverse and growing set of healthcare talent needs.
The company’s suite of healthcare workforce solutions includes managed service programs, vendor management systems (“VMS”) and medical language interpretation services.
AMN Healthcare also demonstrated strength in digital health capabilities with its AMN Passport and AMN Cares. The company has scaled its scalable VMS solution, enabling a wide range of healthcare facilities to rapidly recruit and manage their full spectrum of talent.
Strong competition: In the nursing and paramedical personnel sector, AMN Healthcare competes with a few national players alongside many small regional and local companies. Some of the main competitors vary by segment. When recruiting healthcare professionals, in addition to other recruitment and executive search firms, AMN Healthcare competes with hospital systems that have developed their recruitment services.
Consolidation of care delivery units: Health care delivery organizations are consolidating, giving them greater leverage in negotiating service prices. Consolidations may also result in AMN Healthcare losing its ability to work with certain customers, as the party acquiring or consolidating with its customer may have an already established service provider that it chooses to retain.
Estimate the trend
AMN Healthcare has witnessed an upward trend in 2022 estimate revisions. Over the past 90 days, the Zacks consensus estimate for its earnings per share has moved north 13.1% at $10.46.
Zacks’ consensus estimate for Q2 2022 revenue is pegged at $1.37 billion, suggesting a 59.7% increase from the figure reported a year ago.
Other Key Choices
A few other prominent actions in the wider medical field are Patterson Companies, Inc. OFSP, Veeva Systems Inc. VEEV and Alkermes plc ALKS.
The Patterson Companies, which currently carry the Zacks No. 2 (Buy) ranking, have an estimated long-term growth rate of 9.9%. PDCO’s earnings beat estimates in three of the past four quarters and missed the same in the other, averaging 2.7%.
Patterson Companies lost 3.1% against the industry2.5% growth over the past year.
Veeva Systems has an estimated long-term growth rate of 18.1%. VEEV’s earnings have exceeded estimates over the past four quarters, averaging 9.6%. He currently wears a No. 2 Zacks rank.
Veeva Systems lost 41.6% compared to industrydown 58.9% over the past year.
Alkermes, currently ranked Zacks Rank #2, has an estimated long-term growth rate of 25.1%. ALKS earnings have exceeded estimates over the past four quarters, averaging 350.5%.
Alkermes gained 33.1% compared to industrydown 38.3% over the past year.
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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.