Research

AMN – Although management may have concerns about margins, demand, and new clinicians, market expectations are too bearish, and long-term equity outperformance is likely

December 22, 2020
  • AMN Healthcare Services, Inc. (AMN:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and although management may have concerns about gross margins, 2021 demand, and new clinicians, market expectations are too bearish, and long-term equity outperformance is likely
  • Specifically, management may lack confidence in their ability to mitigate gross margin declines, execute on the businesses’ growth trajectories, and continue refinancing debt. Moreover, they may have concerns about rising SG&A costs. Furthermore, management may lack confidence in their ability to fill the rising health care staffing demand and attract new travel clinicians. Additionally, they may lack confidence in their ability to continue to innovate. Finally, they may be exaggerating 2021 demand and the potential of their Managed Services Program (MSP) pipeline
  • Although management may have concerns about gross margins, 2021 demand, and new clinicians, market expectations are too bearish given the firm’s secular growth trends, and long-term equity outperformance is likely for AMN