Story updated at 10 a.m. to reflect market activity.
HMS gained 2.5% to $16.14 in morning trading.
The firm set a price target of $20 for the company. According to Oppenheimer analysts HMS stock has completely discounted the risk associated with an RAC renewal.
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Separately, 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 reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite currently having a low debt-to-equity ratio of 0.47, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.07 is very high and demonstrates very strong liquidity.
- 41.50% 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, HMSY's net profit margin of 9.12% compares favorably to the industry average.
- Net operating cash flow has declined marginally to $25.98 million or 7.61% when compared to the same quarter last year. Despite a decrease in cash flow HMS HOLDINGS CORP is still fairing well by exceeding its industry average cash flow growth rate of -21.40%.
- 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