MDRX is a Stock Worth Watching

Allscripts-Misys Healthcare Solutions, Inc. (MDRX)

 

Why is this Company Worth Watching

Sean Wieland is a Managing Director and Senior Research Analyst at Piper Jaffray, focusing on health care information technology and health care services said in a recent interview:

 

““The thing about investing in health care IT is about a half a dozen or so relatively small-cap, thinly traded stock, they stand to benefit from this accelerating adoption trend. If you don’t have a product actively marketed in the field today, you are too late to take advantage of this adoption trend that we are seeing come up. So you have companies that scale anything from, on the hospital side, you have about a half a dozen pure-play companies, such as Cerner (CERN), and Eclipsys (ECLP) and CPSI (CPSI) on the hospital side; Allscripts (MDRX)”

 

Allscripts-Misys Healthcare Solutions, Inc is one of the companies he mentioned that would benefit in the near future. (36% Of Physicians Plan To Purchase New Electronic Health Records) MDRX offers software, services, information, and connectivity solutions that enable physicians and other healthcare providers to deliver patient safety and clinical outcomes primarily in the United States.

 

This is a company to watch for earning coming up April 7^th. Year over year, their EPS Trends are projected to grow by almost 20% through May of 2011. They are also projected to outgrow their industry by a staggering 32.8% next year. They did that this year in sales. While the industry as a whole grew 10.2% year over year, MDRX grew 31.7%over the same period. They sit in a good position right now because of sound leadership. Their P/E ratio is much lower than the industry as a whole (54.1 to 75.3) so they are a good value. This is a company with strong fundamental anchors in place. With limited debt and strong inside ownership they are in a strong position for growth. While the industry has a debt/equity ratio of 0.11, MDRX is 0.03.One third the debt but three times the sales and projected growth—they are very sound.

 

Technical Analysis

MDRX has not quite fallen lock step with the S& P 500 on its journey over the last year. Since November of 2009 it appears that MDRX has been on a decline. Only lately has it changed that direction broke through
the bearish resistance that it formed we can see in the light green arrow. But at the same time we also can see an important resistance level it also has touched twice. That level is about 20.65.

 

Support- As this stock has a defined downward movement, we find out first level of support at about 16.6. There is a well defined level here on this weekly chart. It has been touched or toyed with no less than seven times. As this moves down let’s see if it will move off it again. The more it moves off, the better we have an opportunity to keep our direction bullish.   

 

Resistance- We are trading right now in what appears to be a symmetrical triangular pattern. And we are getting close to its final formation.  Since we can see on the comparison chart above that we have already broken through the bearish pattern it was in, now it is a matter of testing the resistance levels. The first level is 20.65, the second level is 21.2.

 

These support and resistance levels are for long term investing opportunities.

Opportunity

Since we have a stock with a strong company that has already broken through the bearish pattern it has been in for 4 ½ months, we are looking for an investment opportunity. The daily chart shows us a correction after a nice little gain. It appears that the Bollinger Bands are preparing to constrict which could mean another move upward.  18.2 is a support level we are looking for. If it stays above, watch the bounce for an entry point and a climb to 21 level.

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