By Jordan Faigen
Amsurg Corp (NASDAQ:AMSG), who operates 242 U.S. ambulatory centers, saw shares soar after the company purchased Sheridan Healthcare.
Amsurg in the News
On Thursday, Amsurg agreed to purchase the largest provider of Anesthesia Services for $2.35 billion. This acquisition elevates Amsurg to a “leadership position” within the medical services field. According to the company’s CEO Christopher Holden, “We’re not only growing faster, we now have more ways to grow.”
An Analyst Perspective
Raymond James analyst John Ransom, upgraded Amsurg Corp (NASDAQ:AMSG) from HOLD to BUY, with a $60 price target following the Sheridan Health acquisition. He argued that the “merger should help boost organic and EPS growth.”
John Ransom’s Past Recommendations
Including his Amsurg Corp (NASDAQ:AMSG) recommendation, Ransom has earned a +30.6% average return per recommendation, with a 76% success rate of recommendations. Ransom has a long history of recommending health services related stocks including AmerisourceBergen Corp. (NYSE:ABC) and Walgreen Company (NYSE:WAG). These successful recommendations have helped him reach the number 49 spot out of 3,100 analysts.
In July of 2012, Ransom recommended BUY prescription drug wholesaler AmerisourceBergen Corp. (NYSE:ABC). after the company announced that it will provide $18.5 billion per year in pharmaceuticals to Express Scripts Holding Company (NASDAQ:ESRX). Based on the new contract, Ransom noted, “While pricing was clearly competitive based on the anticipated earnings contribution from the combined contract, the news should eliminate a plus 12-month overhang on the shares.” The stock has continued on a steady upward journey since this recommendation, and Ransom recently reiterated his BUY AmerisourceBergen recommendation in April of this year. Based on these two ratings, Ransom has earned a +33.0% average return on the stock.
Last November, Ransom downgraded Walgreen Company (NYSE:WAG) from a BUY to a HOLD rating after his firm, Raymond James, analyzed the company’s fiscal 2016 combined earnings. Ransom was one of the analysts on the report that noted, “While we remain optimistic about upside to the long-term synergy capture from the [closely held] Alliance Boots transaction, we believe that the stock price now reflects much of this upside, as fiscal 2016 pro-forma price/earnings valuation has nearly doubled from seven times to start the year (and the time of our upgrade) to 13 times on lower assumed fiscal 2016 earnings per share.” The report continued by saying, “With tough generic comps upcoming (particularly in the fiscal second quarter) and the potential need for management to revisit their fiscal 2016 targets, we see the risk/reward as more balanced and note that the stock is now within shouting distance of our prior $62 price target.” This recommendation, in addition to his two previous ratings, helped Ransom earn a +15.2% average return on the stock.
Ransom has continued to experience strong returns from his recent recommendations. However, back in 2009 he was not always seeing the same kinds of returns. In June of 2009, Ransom downgraded LCA-Vision Inc. (NASDAQ:LCAV) to SELL following the news that the company’s vision correction procedures were down 45% over the last two months. Ransom was concerned about financial pressure and the fact that this disappointing would probably lengthen the shares’ recovery time. However, this recommendation ended up leaving Ransom with a -24.7% average return on the stock.
According to Ransom, the latest medical service acquisition should strengthen Amsurg Corp (NASDAQ:AMSG). With a 76% success rate, will you be taking his advice?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]