An Under-the-Radar Telehealth Stock to Buy Now

NASDAQ: NXGN | NextGen Healthcare, Inc. News, Ratings, and Charts

NXGN – Telehealth software developer NextGen Healthcare (NXGN) is leading the digitization of the healthcare industry with its innovative software designs and services. Despite gaining in the triple-digits in 2020, NXGN stock still looks undervalued given its earnings prospects. Thus, we think NXGN could be a solid addition to one’s portfolio. Let’s take a closer look.

Telemedicine operator NextGen Healthcare, Inc. (NXGN) is a leading company in the telehealth industry, with a market capitalization of $1.25 billion. NXGN’s shares have risen 116.6% over the past year, and 46.6% over the past six months. However, the stock still looks relatively undervalued given its impressive earnings growth prospects.

NXGN’s EPS is expected to rise 16.9% year-over-year in fiscal 2021, while its annual revenues are projected to rise 2.3% over this period to reach $552.68 million.

NXGN has been named a Market Leader in Featured Customers’ Summer 2020 Medical Practice Management Customer Success Report, and Fall 2020 Telemedicine Software Customer Success Report. The company enabled more than one million patient visits through telehealth solutions in 2020.

Click here to checkout our Healthcare Sector Report for 2021

Here’s what we think could drive NXGN’s performance in the near term:

The Future of Telemedicine

The global telehealth industry grew at an accelerated pace in 2020, driven by the COVID-19 pandemic-induced disruption in the healthcare systems worldwide.  The rising number of patient admittances and multiple COVID-19 variants have increased the demand for intricate software solutions in the healthcare industry. While most countries are now stabilizing following mass  vaccine distribution, the popularity of telehealth companies is  here to stay, given the comprehensive cloud-based tracking and online appointment booking services they afford, The global telehealth market is expected to rise at a CAGR of 18.4% over the next five years to achieve  a $22.92 market valuation in 2025.

In terms of its short-term growth prospects, the telehealth industry is well-positioned to benefit from a potential fourth wave of the pandemic; more than 25 states have reported a rise in COVID infected patients. Axios reported a 17% week-over-week rise in average daily  cases during the last week of March, averaging 63,000 cases per day. With COVID-related hospitalizations rising again, people are expected to stick with  telehealth consultations.

Trading at a Discounted Valuation

In terms of non-GAAP forward p/e, NXGN is currently trading at 19.32x, 20.6% lower than the industry average  24.35x. The company’s forward ev/ebitda and ev/sales multiples of 11.15 and 2.23, respectively,  are significantly lower than the respective industry averages.

Also, its forward price/cash flow ratio of 4.22 is 76.7% lower than the industry average  18.10.

Consensus Price Target Indicates Potential Upside

NXGN has an overall rating of 1.85, indicating mixed analyst sentiment. Of the nine Wall Street analysts that rated the stock, three rated it Buy while six rated it hold.

Nevertheless, analysts have issued a median price target of $12.44 for NXGN, indicating a 13.9% potential upside.

POWR Ratings Reflect Rosy Prospects

NXGN has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

NXGN has a B grade for Quality, Growth, and Value. The company’s trailing-12-month ROE, ROA, and ROTC margins compare favorably with the negative industry returns, thereby justifying the Quality grade. In addition,  NXGN’s levered free cash flow and total assets have increased at CAGRs of 28.3% and 167%, respectively. This, coupled with the stock’s relative undervaluation, explains the Growth and Value grades.

Of the 80 stocks in the Medical – Services industry, NXGN is ranked #4. In addition to the grades we’ve highlighted, one  can check out additional NXGN Ratings for Stability, Momentum, and Sentiment here.

There are 22 other stocks in the Medical – Services industry with an overall rating of A or B. Click here to view them.

Bottom Line

NXGN is at the forefront of the healthcare digitization drive in the United States, with its proprietary software NextGen Virtual Visits being one of the biggest online appointment scheduling and bill payment platforms. As several non-emergency medical procedures are being cancelled and with a  potential fourth wave of COVID-19 infections that need  to be controlled, the demand for NXGN’s products and services should rise nationwide.

Click here to check out our Software Industry Report for 2021

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

How to Ride the NEW Stock Bubble?

5 WINNING Stocks Chart Patterns

Unlock the POWR in Your Portfolio!


NXGN shares were trading at $18.68 per share on Monday afternoon, up $0.01 (+0.05%). Year-to-date, NXGN has gained 2.41%, versus a 9.01% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NXGNGet RatingGet RatingGet Rating

Most Popular Stories on

:  |  News, Ratings, and Charts

Bull Run or Bull S#*t?

The S&P 500 (SPY) has impressively broken out above 4,000. However, it seems that ONLY large caps are moving higher while smaller stocks are actually in the red. Why is this? And what does it mean for the future health of this bull market? Read on below for the answers…

:  |  News, Ratings, and Charts

3 Shipping Stocks Rated Strong Buy

Shipping stocks are buoyant as the global economy begins its rebound from the economic effects of the COVID-19 pandemic. We think ZIM Integrated Shipping Services (ZIM), Matson (MATX) and Global Ship Lease (GSL) are three companies that are well positioned to benefit from a sector resurgence and, as such, warrant a closer look now by investors. Let’s evaluate these names more closely.

:  |  News, Ratings, and Charts

Top 10 Growth Stocks

Let me prove beyond a shadow of a doubt that we are in the midst of a stock market bubble. Even better, let me explain why stocks (SPY) will rise for another 12-24 months so you can ride it higher and then parachute out at the peak. And just for good measure I will share my top 10 stocks for today’s market. Read on below for more...

:  |  News, Ratings, and Charts

Avoid These 3 Cathie Wood Stocks in April

Cathie Wood’s contrarian investment strategy may not be ideal for short-term, risk-averse investors with limited funds because most of Wood’s bets require a considerable holding period. So, we think Wood favorites Shopify (SHOP), Spotify (SPOT), and Zillow (Z), which could witness a pullback in the near term, are best avoided now.

:  |  News, Ratings, and Charts

Top 10 Growth Stocks

Let me prove beyond a shadow of a doubt that we are in the midst of a stock market bubble. Even better, let me explain why stocks (SPY) will rise for another 12-24 months so you can ride it higher and then parachute out at the peak. And just for good measure I will share my top 10 stocks for today’s market. Read on below for more...

Read More Stories

More NextGen Healthcare, Inc. (NXGN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NXGN News