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Here's Why You Should Hold on to HMS Holdings Stock Now
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HMS Holdings Corp. is well poised for growth on the back of strong Payment Integrity Solutions and Total Population Management, and solid margins. However, intense competition remains a woe.
Shares of HMS Holdings have lost 5%, compared with the industry’s decline of 6.9% on a year-to-date basis. The S&P 500 Index has fallen 10.8% in the same time frame.
The company, with a market capitalization of $2.48 billion, offers cost-containment solutions in the United States. HMS Holdings also provides Coordination of Benefits services to the government and commercial healthcare payers. It anticipates earnings to improve 11% over the next five years. Moreover, it has a trailing four-quarter positive earnings surprise of 14.1%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Weighing on the Stock?
The U.S. healthcare insurance benefits the cost containment industry via offering cost containment services, both directly and indirectly (through subcontracting). Competition is therefore intense in this dynamic industry as customers have several alternatives available.
Consequently, stiff competition remains a concern.
What’s Favoring the Stock?
HMS Holdings continues to benefit from promising and growing Payment Integrity Solutions. Payment Integrity (PI) has been gaining from greater throughput in the implementation process, expedited customer approvals for new PI edits, applied technology to simplify processes, increased coder productivity and accelerated revenue generation.
Per management, PI is anticipated to be a significant contributor to the Analytical Services wing in 2020.
In addition to PI solutions, Total Population Management (TPM) comes under HMS Holdings’ unique suite of Analytical Services. Notably, TPM has been gaining traction for a while now, which in turn has been contributing significantly to the top line.
Product-yield enhancements and process improvements are consistently bolstering HMS Holdings’ margins and profitability. The company has been diligently managing operating expenses and broadening the use of technology tools such as robotic process automation and ML.
These initiatives have been aiding the company in delivering strong margins for the past few years. The momentum is expected to continue in the near term.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $705.9 million, indicating an improvement of 12.7% from the prior year. The same for earnings stands at $1.23 per share, suggesting a decline of 6.8% from the previous year.
ResMed has an estimated long-term earnings growth rate of 14.4%.
Merit Medical has an estimated long-term earnings growth rate of 12.1%.
DexCom has a projected long-term earnings growth rate of 36.7%.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Here's Why You Should Hold on to HMS Holdings Stock Now
HMS Holdings Corp. is well poised for growth on the back of strong Payment Integrity Solutions and Total Population Management, and solid margins. However, intense competition remains a woe.
Shares of HMS Holdings have lost 5%, compared with the industry’s decline of 6.9% on a year-to-date basis. The S&P 500 Index has fallen 10.8% in the same time frame.
The company, with a market capitalization of $2.48 billion, offers cost-containment solutions in the United States. HMS Holdings also provides Coordination of Benefits services to the government and commercial healthcare payers. It anticipates earnings to improve 11% over the next five years. Moreover, it has a trailing four-quarter positive earnings surprise of 14.1%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Weighing on the Stock?
The U.S. healthcare insurance benefits the cost containment industry via offering cost containment services, both directly and indirectly (through subcontracting). Competition is therefore intense in this dynamic industry as customers have several alternatives available.
Consequently, stiff competition remains a concern.
What’s Favoring the Stock?
HMS Holdings continues to benefit from promising and growing Payment Integrity Solutions. Payment Integrity (PI) has been gaining from greater throughput in the implementation process, expedited customer approvals for new PI edits, applied technology to simplify processes, increased coder productivity and accelerated revenue generation.
Per management, PI is anticipated to be a significant contributor to the Analytical Services wing in 2020.
In addition to PI solutions, Total Population Management (TPM) comes under HMS Holdings’ unique suite of Analytical Services. Notably, TPM has been gaining traction for a while now, which in turn has been contributing significantly to the top line.
Product-yield enhancements and process improvements are consistently bolstering HMS Holdings’ margins and profitability. The company has been diligently managing operating expenses and broadening the use of technology tools such as robotic process automation and ML.
These initiatives have been aiding the company in delivering strong margins for the past few years. The momentum is expected to continue in the near term.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $705.9 million, indicating an improvement of 12.7% from the prior year. The same for earnings stands at $1.23 per share, suggesting a decline of 6.8% from the previous year.
Stocks to Consider
Some better-ranked stocks from the broader medical space include ResMed Inc. (RMD - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and DexCom, Inc. (DXCM - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ResMed has an estimated long-term earnings growth rate of 14.4%.
Merit Medical has an estimated long-term earnings growth rate of 12.1%.
DexCom has a projected long-term earnings growth rate of 36.7%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>