Health care IT companies offer hospitals and physician offices IT solutions to comply with meaningful use requirements to obtain $30 billion in federal stimulus money from the HITECH Act, creating investment opportunities in companies in the sector, says Stephen Shankman, an Analyst with UBS Investment Bank.
“The large majority of the incentive payments related to HITECH are expected to be paid out over the next five years,” Shankman said. “EHR or clinical applications are more of the focus over the near term, as both hospitals and physicians try to align themselves to receive these incentive payments.”
Shankman has a “buy” rating on Allscripts Healthcare Solutions (MDRX). He expects 25% upside from current levels and he says the stock is trading at a discount of 19 times 2012 EPS estimates, compared to the group’s 24 times.
“We think the market is underappreciating Allscripts‘ market-leading, hospital-to-physician product offering. And that’s really only matched by a few other players, one of which is private,” Shankman said. “So that gives them high-quality exposure to the EHR adoption story on both the hospital and physician side.”
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