NEW YORK (TheStreet) -- HMS Holdings
(HMSY - Get Report) shares are up 9.5% to $21.09 on Monday after analysts at First Analysis upgraded the stock to "overweight" from "equal weight" with a $27 price target.
The price target for the healthcare cost containment service provider represents a 28% upside from the stock's current price.
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TheStreet Ratings team rates HMS HOLDINGS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate HMS HOLDINGS CORP (HMSY) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, deteriorating net income and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.42, which clearly demonstrates the ability to cover short-term cash needs.
- 39.43% is the gross profit margin for HMS HOLDINGS CORP which we consider to be strong. Regardless of HMSY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.36% trails the industry average.
- The share price of HMS HOLDINGS CORP has not done very well: it is down 22.26% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Health Care Technology industry and the overall market, HMS HOLDINGS CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: HMSY Ratings Report