On Mar 27, 2015, Zacks Investment Research upgraded medical services provider Air Methods Corp AIRM to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The upgrade primarily reflects impressive fourth-quarter 2014 results. The company reported EPS of 61 cents, which breezed past the Zacks Consensus Estimate of 45 cents and surged 60.5% from the prior-year quarter. We note that Air Methods has beaten the Zacks Consensus Estimate in two of the last four quarters, with an average positive surprise of 11.44%.
Total revenue increased 12% year over year to $249 million, in line with the Zacks Consensus Estimate. Net patient transport revenue increased 14.8% to $174.3 million. Net revenue per patient transport grew 6% to $12,238 from $11,531 in the year-ago quarter. Total patient transports from community-based locations increased 9% to 14,209.
Community based transports originating from Air Methods’ direct call transfer center increased 36% representing over 700 additional transports. In 2014, the company launched 10 new Greenfield locations and also won outsourcing contracts from 9 hospital customers.
Air Methods recently placed an order to Textron’s TXT Bell Helicopter division to buy 200 upgraded Bell 407 GXPs. The company will use these advanced helicopters to extend its Helicopter Emergency Medical Services (HMS) to patients across the U.S.
We believe that the upgraded helicopters will help Air Methods expand its footprint. Moreover, the improved helicopters are expected to significantly reduce maintenance expenditure. Additionally, favorable hospital outsourcing trends, strong flight volume growth, and significant reduction in fuel prices are key growth drivers for the company.
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2015 increased 6.7% (19 cents) to $3.01 per share over the last 30 days. Similarly, for fiscal 2016, the Zacks Consensus Estimate climbed 3.7% (12 cents) to $3.37 per share over the same time frame.
Other Stocks to Consider
One may also consider other players in the industry that look attractive at current levels. These include ICON ICLR and Intrexon XON. Both the stocks carry the same Zacks Rank as Air Methods.
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