LHC Group, Inc. LHCG is well poised for growth on the back of a broad range of services, and prudent acquisition and joint ventures.
The stock has gained 75.9%, compared with the industry’s growth of 18.8% in a year’s time. Further, the S&P 500 Index rallied 20.3% in the same time frame.
The company — with a market capitalization of $6.59 billion — serves as a post-acute care partner for hospitals, physicians and families in the United States. It anticipates earnings to improve 13.1% over the next five years.
The stock also has a Growth Score of A. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are better picks than most.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #1.
Key Catalysts
LHC Group has been offering a wide array of services through its diverse business segments. These, in turn, have been instrumental in driving the top line.
Within home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care. Increased acquisition activities in this space has helped the company gain a competitive edge.
Through the first half of 2020, the company has been sourcing adequate PPE kits for patients and clinicians. These PPE kits include N95 mask, isolation gown, face shield, gloves, head and shoe covering, appropriate facemask, and a pair of gloves.
Additionally, LHC Group has been committed to making acquisitions and joint ventures to drive inorganic expansion. The company’s pipeline of potential M&A growth opportunities remains robust and is well balanced between Home Health and Hospice.
On Aug 1, 2020, LHC Group finalized a JV with Orlando Health to boost home health and home and community based services (HCBS) in the state of Florida. The company anticipates that JV to generate almost $3.5 million in incremental annualized revenues.
On the back of the M&A pipeline and historic organic growth opportunity, the company remains optimistic and bullish on both organic and M&A growth opportunities for the remainder of 2020, 2021 and beyond.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $2.06 billion, indicating a slight decline of 1.1% from the prior-year quarter. The same for adjusted earnings per share stands at $4.65, suggesting growth of 4% from the year-ago reported figure.
Other Stocks to Consider
Some other top-ranked stocks from the broader medical space include West Pharmaceutical Services, Inc. WST, Thermo Fisher Scientific Inc. TMO and PerkinElmer, Inc. PKI. While PerkinElmer sports a Zacks Rank of 1, both Thermo Fisher and West Pharmaceuticals carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
PerkinElmer has a projected long-term earnings growth rate of 17.4%.
West Pharmaceutical has a projected long-term earnings growth rate of 17.4%.
Thermo Fisher has an estimated long-term earnings growth rate of 15%.
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