The Zacks Analyst Blog Highlights DaVita, Option Care Health, Addus HomeCare, Encompass Health and The Pennant
For Immediate Releases
Chicago, IL – May 8, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: DaVita Inc. DVA, Option Care Health Inc. OPCH, Addus HomeCare Corp. ADUS, Encompass Health Corp. EHC and The Pennant Group Inc. PNTG.
Top 5 Outpatient and Home Healthcare Stocks for Solid Returns
After navigating a tough pandemic era, the outpatient and home healthcare industry has been seeing steady growth on the back of innovation in services. The industry includes companies that offer ambulatory care in an outpatient setting or at home. They use advanced medical technologies for diagnosis, treatment, and rehabilitation services. These players are operators of HMO medical centers, kidney dialysis centers and other outpatient care centers.
Meanwhile, Wall Street regained momentum in the first week of May after April’s meltdown. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 2.6%, 8.1% and 9.4%, respectively.
The Zacks-defined Medical – Outpatient and Home Healthcare Industry is currently in the top 31% of the Zacks Industry Rank. In the past year, the industry has provided 15.3% returns, while its year-to-date return is 4.5%. Since it is ranked in the top half of Zacks Ranked Industries, we expect the consulting services industry to outperform the market over the next three to six months.
Near-Term Drivers
The primary advantage of outpatient clinics is cost-effectiveness. Modern-day outpatient clinics offer a broad spectrum of treatment and diagnostic options and even conduct minor surgical procedures. Financial incentives like health plans and government program payment policies supporting services in lower-cost care settings have also been driving outpatient care.
Artificial Intelligence (AI) has been a great success in the healthcare sector, boosting the outpatient and home healthcare space. Outpatient companies prefer bots and automated techniques for managing health information. With the help of AI, hospitals have been achieving better outcomes, with patients receiving more efficient and personalized care.
The outpatient industry has been generating huge profits from Electronic Health Records and ePrescriptions. The most visible area where AI can make a significant difference is in mental healthcare at home.
The rising demand for remote patient monitoring (RPM) has considerably driven the demand for wearable technology to monitor patient’s health. Although wearables have been popular for several years, their integration with AI has recently increased their popularity.
Wearables have become a powerful home healthcare tool. AI technology-powered RPM enables healthcare firms to provide consistent patient care without occupying space in their hospitals and facilities, thus reducing overcrowding.
Our Top Picks
We have narrowed our search to outpatient and home healthcare stocks that have strong growth potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita Inc. has been expanding its global presence via its Integrated Kidney Care business. DVA has been generating solid revenues by providing dialysis services. DVA has been opening and acquiring several dialysis centers both within the United States and overseas, which is promising. The strong solvency position of DVA is an added plus.
Zacks Rank #1 DaVita has an expected revenue and earnings growth rate of 3.5% and 12%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last seven days.
Option Care Health Inc. provides infusion and home care management solutions. OPCH offers products, services and condition-specific clinical management programs for gastrointestinal abnormalities, infectious diseases, cancer, organ and blood cell transplants, bleeding disorders and heart failures.
OPCH markets its services through patient referrals, including physicians, hospital discharge planners, hospital personnel, health maintenance organizations, and preferred provider organizations.
Zacks Rank #1 Option Care Health has an expected revenue and earnings growth rate of 10.7% and 15.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last seven days.
Addus HomeCare Corp. is a comprehensive provider of a broad range of social and medical services in the home. ADUS operates its business through two divisions, home & community services and home health services.
ADUS’ services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care. ADUS’ consumers are individuals with special needs who are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled.
Zacks Rank #2 Addus HomeCare has an expected revenue and earnings growth rate of 7.9% and 6.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the last 60 days.
Encompass Health Corp. provides post-acute healthcare services in the United States and Puerto Rico. EHC continues to witness consistent growth, backed by planned bed additions to existing hospitals and the construction of new hospitals.
EHC expects to make bed additions in the range of 80-120 over the 2025-2027 period. EHC's solid cash-generating abilities enable business investments and prudent deployment of capital.
Zacks Rank #2 Encompass Health has an expected revenue and earnings growth rate of 10.3% and 11.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the last 30 days.
The Pennant Group Inc. provides healthcare services in the United States and operates in two segments, namely, Home Health and Hospice Services, and Senior Living Services. PNTG operates home health, hospice, and home care agencies, as well as senior living communities throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin, and Wyoming.
PNTG offers home health services, including clinical services, such as nursing, speech, occupational and physical therapy, medical social work, and home health aide services; and hospice services comprising clinical care, education, and counseling services for the physical, spiritual, and psychosocial needs of terminally ill patients and their families.
Zacks Rank #2 The Pennant Group has an expected revenue and earnings growth rate of 11.5% and 19.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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DaVita Inc. (DVA) : Free Stock Analysis Report
Addus HomeCare Corporation (ADUS) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
The Pennant Group, Inc. (PNTG) : Free Stock Analysis Report
Option Care Health, Inc. (OPCH) : Free Stock Analysis Report
