Sunday, October 02, 2005

Electronic Medical Record Stocks Are Undervalued

Electronic medical records are the future. Currently only 25% of US hospitals have electronic medical records. Then throw in international demand and the royalty/service fees these companies will collect for servicing and updating existing customers.

GE just bought IDX Systems (Nasdaq: IDXC) for a 25% premium. IDX is the company that is two steps behind. They lost a $1.6 billion contract with Fujitsu to Cerner in June. Look for other companies to try to grab a share of the market by acquiring the below companies. Cerner is the best company but also has a $3.25 billion market cap compared to Allscripts & Quality Systems which have market caps under $1 billion.

Takeover Candidates
Cerner Corporation (CERN)
Takeover Price (40x 2006E = $105-115) (35.8% Float Short)

Allscripts Healthcare Solutions (MDRX)
Takeover Price (25% Premium = $23) (23.3% Float Short)

Quality Systems (QSII)

Takeover Price (25% Premium = $85-90) (19.3% Float Short)

Potential buyers: Microsoft, Tyco, Johnson & Johnson, Siemens

NOTE: I am long Cerner


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Blogger suresh said...

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Electronic Medical Records

4/21/2012 4:49 AM  

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