Merge Healthcare's (MRGE) growth prospects
are highly dependent on capital investments by hospitals for advanced imaging solutions, which are in turn tied to general economic conditions. Moreover, declining Medicare reimbursements could negatively affect hospital and imaging clinic revenue, which could reduce demand for software and services offered by Merge.
Although there is immense potential in the diagnostic imaging market, we remain concerned about the competitive scenario and macroeconomic headwinds. The presence of many big players like GE and McKesson has made the diagnostic imaging market highly competitive.
These headwinds compelled us to maintain the stock at Underperform with a target price of $5.25. Our target price corresponds to a price-to-book multiple of 8.1.
MERGE HEALTHCAR (MRGE): Free Stock Analysis Report
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