Here's Why You Should Retain AMED Stock in Your Portfolio for Now

Amedisys’ AMED valuable partnerships and acquisitions are expected to generate significant synergies in the upcoming quarters. The company’s continuously improving clinical quality for patients is demonstrated through its high Quality of Patient Care and Patient Satisfaction star ratings. However, a dull macroeconomic scenario and fierce competitive pressure may restrict Amedisys’ growth potential.

In the past year, this Zacks Rank #3 (Hold) company’s shares have risen 5.9% compared with the industry and the S&P 500 composite’s growth of 3.4% and 11%, respectively.

The leading home health and hospice services provider has a market capitalization of $3.18 billion. Amedisys has an earnings yield of 5.1%, higher than the industry’s 4.2%. 

Tailwinds for AMED Stock

Strategic Partnerships and Dispositions to Add Value: Amedisys is developing and acquiring new business lines that will complement its existing home care and hospice business and help seniors manage their health more effectively. In 2024, Contessa Health, a subsidiary of Amedisys, was selected by the Centers for Medicare & Medicaid Services (“CMS”) to participate in a new Medicare alternative payment model, designed to support people living with dementia and their caregivers. Furthermore, the company introduced advanced molecular testing to its nationwide care centers in collaboration with Patient Choice Laboratories. The initiative leverages the latest in diagnostic technology to improve the accuracy and speed of detecting pathogens in urine, respiratory and wound infections.

Efforts to Improve Clinical Quality: Amedisys’ focus on clinical distinction is demonstrated through its Quality of Patient Care and Patient Satisfaction star ratings. The company strives for a 4.0 Quality of Patient Care star rating across all its care centers and has implemented targeted action plans to enhance patient care and foster a culture of quality. In the CMS January 2025 Final release, Amedisys successfully maintained this goal, achieving an average Quality of Patient Care star rating of 4.18 across all providers. 88% of its care centers received a rating of 4 stars or higher, with 11 centers earning a perfect 5-star rating. Additionally, Amedisys' Patient Satisfaction star average stood at 4.02, surpassing the industry average.

Headwinds for AMED Stock

Macroeconomic Pressures on Business Operations: With escalating conflicts in the Middle East, Ukraine and other geopolitical tensions creating volatility in the global financial markets, these issues are likely to cause severe disruptions in the global supply chain and energy markets. Furthermore, inflation has been steadily increasing throughout the U.S. economy. Amedisys has been materially impacted by the current inflationary environment in the form of high labor costs and it anticipates these pressures to persist throughout 2025. The company’s total cost of services rose mainly due to planned wage increases, wage inflation, and an increase in salaried clinicians and clinical managers.

Competitive Landscape: The market for home health and hospice is fragmented with several small local providers. With few barriers to entry in this market, Amedisys primarily faces tough competition from local, privately and publicly-owned, and hospital-owned healthcare providers. It competes based on the availability of personnel, the quality of services, the expertise of visiting staff and the price of services.

Amedisys’ Estimates Trend

The Zacks Consensus Estimate for 2025 earnings per share has moved south 0.4% to $4.90 in the past 30 days.

The Zacks Consensus Estimate for 2025 revenues is pegged at $2.46 billion, indicating a 4.6% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Prestige Consumer Healthcare PBH and Inspire Medical Systems INSP.

Phibro Animal Health has an estimated long-term earnings growth rate of 26.2% compared with the industry’s 15.9%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 30.6%. Its shares have rallied 26.3% compared with the industry’s 10% growth in the past year.

PAHC flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Prestige Consumer Healthcare, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 5.4% compared with the industry’s 0.6%. Shares of the company have rallied 30.3% compared with the industry’s 10% growth. PBH’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.8%.

Inspire Medical Systems, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 28.9% compared with the industry’s 25.2%. Shares of the company have lost 9.5% against the industry’s 19.6% growth. INSP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 356.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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