Stifel Sees 'Limited Growth Opportunities' For Allscripts

Analysts at Stifel have initiated coverage on Allscripts Healthcare Solutions Inc (NASDAQ: MDRX). In a report released Tuesday, analysts issued a Hold rating on Allscripts stock and explained that they see limited growth opportunities for the company.

‘Difficult' Turnaround

Analysts believe that Allscripts has an uphill battle ahead of it.

According to the report, the company's potential turnaround story relies on somehow figuring out how to return to 5-8 percent top-line growth and 18-22 percent EBITDA growth over a three-year period. Without greenfield growth opportunities for the company's electronic health record (EHR) products, analysts struggle to find a convincing growth story for Allscripts.

They note that the majority of the demand for most of the company's products is government mandate-driven.

Where To Go From Here

Analysts feel that many of the products that Allscripts offers lack true integration, although they note that Sunrise is one exception. Analysts disagree with management's strategy of maintaining the company's core EHR systems provider branding. Instead, they suggest that increasing focus on population health and patient portals could be a better path forward.

Analysts note that they see a particular opportunity for Allscripts to differentiate its operations from those of competitors Epic and Cerner Corp (NASDAQ: CERN) by "developing and strengthening the value proposition around population health."

Pressure Coming From Investment Shift

Analysts explain that the value proposition of Allscript's core EHR product centers on digitization rather than performance. "We believe solid growth and performance in managed IT services will place significant pressure on the core EHR business," they write.

Allscripts shareholders would certainly love to see some signs of life from the stock, which is down nearly 5 percent in 2015 and more than 30 percent in the past year.