Story updated at 10:05 a.m. to reflect market activity.
Team Health Holding gained 3.6% to $46.64 in morning trading.
The bank set a $54 price target for the company. Analysts A.J. Rice, Brandon Fazio, and Jailendra Singh said the company is a major beneficiary of healthcare reform, with steady core growth.
"Since 2009, TMH has reported a CAGR in net revenue of roughly 13.8% and adjusted EBITDA of 13.7%, even with macro pressures on both volumes and price in recent years," the analysts wrote. "Further, TMH has not reported a decline in same contract revenue growth in its history. This highlights the critical non-discretionary nature of its emergency medical services (71% of total revs), which has insulated the business from the volume and price pressures seen in other healthcare sectors in recent years."
Separately, TheStreet Ratings team rates TEAM HEALTH HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TEAM HEALTH HOLDINGS INC (TMH) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TMH's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TEAM HEALTH HOLDINGS INC has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TEAM HEALTH HOLDINGS INC increased its bottom line by earning $1.23 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $1.23).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 45.3% when compared to the same quarter one year prior, rising from $14.78 million to $21.47 million.
- The gross profit margin for TEAM HEALTH HOLDINGS INC is rather high; currently it is at 55.06%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.90% trails the industry average.
- Powered by its strong earnings growth of 42.85% and other important driving factors, this stock has surged by 32.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: TMH Ratings Report